There has been considerable effort in ascertaining with confidence the trends in income inequality in South Africa. South Africa has traditionally been among the most unequal countries in the world and continues to be so. Surprisingly, levels of inequality have not decreased despite the transition to democratic rule in the 1990s; if any, they seem to have increased. There has also been considerable work on the proximate causes of these highlevels of inequality on the basis of inequality decompositions (See Leibbrandt, Levinsohn and McCrary 2010, Leibbrandt. Woolard, Finn and Argent 2010, and Bhorat et al. 2009 for recent analyses). However, much less is known about the underlying causes of this high level of inequality and of its persistence.