The causes and impact of Income inequality in South Africa

Abstract

ABSTRACT The purpose of this research is to determine the causes and impact of income inequality in South Africa using Fuzzy Cognitive Mapping. Income inequality in South Africa is anchored in the legacy of colonialism and apartheid. The democratically elected government of South Africa has not succeeded in reducing income inequality. The apartheid government enabled income inequality to thrive through restrictive and exclusionary policies. The democratically elected government allowed the income inequality to persist by not addressing systematic and structural causes of inequalities in South Africa. Data was collected through the content and thematic analysis of the literature review. On the back of the thematic analysis, the causal relationships were used to draw the Fuzzy Cognitive Maps. The key findings of the research were that government policy, the concentration of income by gender, intergenerational inequality, market forces, concentration of income by race, economic growth, skills return, corruption, poverty, and neighbourhood dynamics all have the impact of increasing income inequality. The research also showed that access to educational opportunities, collective bargaining, broad access to employment, progressive taxation, redistribution, and human capacity development, have the impact of decreasing income inequality in South Africa. The key message of the research is that improving broad access to quality educational opportunities, improving regulation, optimisation and moderation of market forces, having good economic growth, implementation of progressive guidelines to regulate government policy, countering the concentration of income by gender, decentralising the ownership of means of production and land, countering intergenerational inequality and the concentration of income by race, have the desired outcomes of reduced income inequality, reduced crime, improved health outcomes and improved social welfare