Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100101
Authors: 
Lechtenfeld, Tobias
Zoch, Asmus
Year of Publication: 
2014
Series/Report no.: 
Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 157
Abstract: 
This paper asks whether income mobility in South Africa over the last decade has indeed been as impressive as currently thought. Using new national panel data (NIDS), substantial measurement error in reported income data is found, which is further corroborated by a provincial income data panel (KIDS). By employing an instrumental variables approach using two different instruments, measurement error can be quantified. Specifically, self-reported income in the survey data is shown to suffer from mean-reverting measurement bias, leading to sizable overestimations of income convergence in both panel data sets. The preferred estimates indicate that previously published income dynamics may have been largely overestimated by as much as 77% for the national NIDS panel and 39% for the provincial KIDS panel. Overall, income mobility appears much smaller than previously thought, while chronic poverty remains substantial and transitory poverty is still very limited in South Africa.
Subjects: 
Measurement Error
Income Dynamics
Consumption Dynamics
South Africa
JEL: 
C81
I32
O15
Document Type: 
Working Paper

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