Earnings and Earnings Inequality in South Africa: Evidence from Household Survey and Administrative Tax Microdata from 1993 to 2020

Abstract

In this paper I use household survey and administrative tax microdata to describe earnings inequality in South Africa over the period 1993–2020. I find that earnings inequality is very high but has been stable, or even declined by some measures, and earnings increases have been largest at the bottom of the earnings distribution. Previous findings of increasing earnings or wage inequality in South Africa from 2010 onwards come from one set of household surveys. I show that the publicly available data from these surveys include poor‐quality earnings imputations and that non‐public data without these imputations provide more sensible trends in earnings and earnings inequality. Comparisons between tax and survey data also show that earnings inequality in the tax data is generally higher than in the more comparable households survey and that earnings in the surveys is under‐captured far down the formal sector earnings distribution.