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Inequality in South Africa: what does a composite index of well-being reveal?

Stephanié Rossouw,Talita Greyling

Published 2021 in New Zealand Economic Papers

ABSTRACT

In this paper, we construct a multidimensional composite well-being measure for South Africa at a micro-level. This allows us to compare the inequalities in well-being in 2008 and 2017. Additionally, we determine the factors, which are significantly related to the inequality in well-being at these two points in time, using recentered influence function (RIF) regressions. Lastly, we use the Blinder–Oaxaca decomposition technique to determine if the change in well-being inequality, is mainly due to an endowment – or a coefficient effect. The RIF results show factors increasing well-being inequality are demographic but also extends to knowledge and skills in the technology sector, access to financial markets, transport and living outside of urban centres. Blinder–Oaxaca decomposition results indicate the difference in well-being inequality is mainly due to the coefficient effect. Policies should not only endeavour to attain a more equal spread of endowments but should also consider the elasticities of these endowments.

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