This doctoral thesis analyses the changes in income inequality in post-apartheid South Africa. The thesis adds to the existing literature by explaining the underlying causes of the changes in observed income inequality. As such, this thesis applies different decomposition
methods to the Gini coefficient. In the analysis of household income sources, traditional static decompositions are supplemented by applying micro-simulations that allow for a dynamic decomposition of changes in income sources reported in household surveys. The results corroborate previous findings of the significant contribution of labour market incomes and government grants. However, the application of advanced dynamic methods highlights the effects of changes in other factors, such as investment income and the role of employed household members, which have previously received less attention.