Distribution pattern of households’ income inequality in Eastern Cape, South Africa

Abstract

Income inequality is a pervasive problem in South Africa and particularly affects the Eastern Cape, where poverty levels remain high despite several efforts to address this societal issue. The datasets from 1499 households used for this study, were extracted from the 2021 South African General Household Survey. This study thus examined the distributional pattern of households’ income inequality in Eastern Cape, South Africa, through the use of exploratory data analysis and application of regression-based decomposition of inequality. The EDA results revealed that relatively older households are more concentrated than those young people, female-headed households were also predominant in the study area, while the majority of the households are Black South Africans. The magnitude of the monetary variables’ departure from the mean inferred clear evidence of a widened households’ income disparity or inequality in the study area. The decomposition analysis indicated the contributions of various socioeconomic factors to income inequality. The findings from the regression-based decomposition of inequality found household size, access to basic infrastructure services, possession of assets, internet communication facilities, and households’ population group, as the major drivers of the households’ income inequality in the province, while livelihood diversity has a relatively moderate proportionate contribution. On the other hand, factors such as age and gender of the household head, as well as households’ involvements in agriculture have a minor effect on the households’ income inequality. This paper finally concludes that the relative contributions of each factor contributing to inequality were deemed important for designing effective policy-relevant interventions which can be used to promote economic growth and to address this persistent challenge of income inequality in society.