Cross-Sectional Features of Wealth Inequality in South Africa: Evidence from the National Income Dynamics Study

Abstract

In this paper, we examine the cross‐sectional distribution of wealth in South Africa by using survey data from the National Income Dynamics Study (NIDS) for 2010‐2011 (wave 2) and 2014‐2015 (wave 4). Our results show that wealth inequality is very high, with the bottom half of the population owning very little and the top decile holding about 85% of total wealth in 2010‐2011 and 2014‐2015. While the results also show that wealth inequality within‐Race and between‐Race are high, we find that wealth inequality within‐Race is higher and particularly in the Black race, with a greater concentration of the Black population at the bottom end of the wealth distribution. Further, the results show that the racial wealth gap between the Black race and the White race is high, with a typical Black household holding relatively less than 5% of the wealth held by a typical White household. Finally, we find that wealth varies significantly over the age profile, suggesting support for the life cycle hypothesis.