Economic structure and top earnings inequality in South Africa: A firm-level and sectoral perspective

Type Working Paper - WIDER Working Paper
Title Economic structure and top earnings inequality in South Africa: A firm-level and sectoral perspective
Author(s)
Volume 39
Publication (Day/Month/Year) 2025
URL https://doi.org/10.35188/UNU-WIDER/2025/598-1
Abstract
Inequality at the top is on the rise, and labour income is a progressively larger contributor to concentration at the top. This paper investigates top earnings inequality in South Africa from a sectoral and firm-level perspective, using matched employer–employee administrative data.

We also propose a method for decomposing top shares in within-groups and between-groups components. Despite the clear presence of sectoral heterogeneity, as expected for a middle-income country, we find in the decompositions that the main source of inequality occurs within firms rather than between sectors or between firms in the same sector.

Regressions show that larger and more productive firms are associated with greater firm-level inequality, as well as those with a larger share of male workers, while the opposite is valid for listed firms and those in sectors with greater union density. These results are informative for policymaking decisions in support of inclusive processes of structural change.

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