End of Apartheid, Not of Inequality: The Slow Transition in a Segregated Economy
Prof. Kristina Manysheva
Assistant Professor
Columbia Business School
Despite the formal end of Apartheid in 1994, South Africa remains one of the most unequal countriesin the world. This paper investigates the mechanisms behind this persistence of inequality by developinga spatial dynastic model with heterogeneous agents, incomplete markets, and endogenous choices overeducation, occupation, savings, and location. Drawing on newly assembled micro-geographic data, wedocument a shift in inequality from being primarily across races to increasingly within the Black popula-tion, with spatial segregation—especially the legacy of Townships—playing a key role. Our model, dis-ciplined by detailed spatial and socioeconomic data, captures the slow intergenerational convergence ineducation and occupational outcomes observed in post-Apartheid South Africa. It shows how inheritedspatial disadvantages—through high commuting costs, disparities in school quality, and limited accessto credit—continue to shape households’ educational, occupational, and locational choices, reinforcinginequality long after formal legal barriers have been removed. Quantitatively, we find that removing per-sistent spatial distortions in Townships accelerates the transition to a race-blind equilibrium by 40% and reduces income inequality by 10%.
