The contribution of income components to income inequality in the rural former homelands of South Africa: a decomposable Gini analysis

Households in developing countries adopt livelihood strategies that often r ely on income front a diversify of sources. From a policy perspective it be comes important to understand the relative importance of income sources in driving inter-household inequality and poverty. Recent theoretical advances allow for the decomposition of the Gini coefficient by income components a nd for an assessment of the impact of changes in income components on the G ini coefficient. This paper applies such a technique to South African data for the rural former 'homeland' areas. In doing so, the paper extends exist ing knowledge of South African income inequality. Particular attention is p aid to integrating the decomposition work into debates about rural developm ent policy in South Africa.