Vimal Ranchhod: The Multidimensionality of Income Inequality

Speaking at a symposium on “Social Mobility and Inequality in South Africa” co-hosted by the Southern Africa Labour and Development Research Unit (SALDRU) and the Friedrich Ebert Stiftung South Africa Office, Prof. Vimal Ranchhod talked about the multidimensionality of income inequality.

Ranchhod provided a theoretical framing to the discussions of the day. Underlying the statistics and data that SALDRU works with, is theory, he said, making reference to the inequality hidden behind the tables and graphs that SALDRU produces.

Inequality manifests itself in many ways. These are: racial inequality, land inequality, income inequality, power inequality and asset inequality. In many instances, we are not very precise when we talk about inequality. But it is important to know which inequality one is talking about because inequalities intersect, he said. For example, change in the labour market leads to change in your earning level, which leads to change at the household level.

Ranchhod also talked about why it’s important to focus on inequality. High inequality violates our sense of fairness. Very high earners possibly don’t deserve to earn as much as they do. Inequality has negative economic effects. High inequality can impede human development, cause political instability and make societies less trusting. Health problems have also been correlated with high inequality.

Whilst it is true that all this is correlational rather than causal, it is quite compelling when you look at the aggregate set of things that correlate with high inequality. There is a whole range of things that go badly in highly unequal societies, he said.

The historical structures we inherited are very powerful, Ranchhod said. It’s hard to see how you evolve organically out of that when it was designed to be “stably unequal”, he argued.

Download Dr. Ranchhod’s slide presentation (PDF). View the symposium’s programme (PDF).

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