Departamento de Economía Aplicada http://webs.uvigo.es/x06 Working Paper: 11/07. December 2011 Race, Poverty, and Deprivation in South Africa Carlos Gradín di Coordinator: Eva Rodríguez Míguez
[email protected] Race, Poverty, and Deprivation in South Africa Carlos Gradín* Universidade de Vigo Abstract The aim of this paper is to explain why poverty and material deprivation in South Africa are significantly higher among those of African descent than among whites. To do so, we estimate the conditional levels of poverty and deprivation Africans would experience had they the same characteristics as whites. By comparing the actual and counterfactual distributions, we show that the racial gap in poverty and deprivation can be attributed to the cumulative disadvantaged characteristics of Africans, such as their current level of educational attainment, demographic structure, and area of residence, as well as to the inertia of past racial inequalities. Progress made in the educational and labor market outcomes of Africans after Apartheid explains the reduction in the racial poverty differential. JEL Classification: D31, D63, I32, J15, J71, J82, O15. Keywords: poverty, deprivation, race, decomposition, South Africa, households’ characteristics. * I acknowledge financial support from the Spanish Ministerio de Educación y Ciencia (Grant ECO2010-21668-C03-03/ECON) and Xunta de Galicia (Grant 10SEC300023PR). Address for correspondence: Carlos Gradín, Facultade de Ciencias Económicas e Empresariais, Universidade de Vigo, Campus Lagoas-Marcosende s/n, 36310 Vigo, Galicia, Spain. E-mail:
[email protected]. 1 1. Introduction South Africa stands out as a country with one of the largest racial divisions in the world due to European colonization and the Apartheid regime that followed independence, which officially ended in 1994.