Underemployment in South Africa

With the introduction of the Quarterly Labour Force Survey since 2008, a newly derived variable, namely underemployed, has become available. It is derived according to the ‘time-related’ approach (i.e. those who are employed, but would like to work longer hours and are available to work longer hours in the near future). However, underemployment could also be derived according to the ‘inadequate employment situations’ approach (e.g. under-utilisation of skills, over-qualification). Because underemployment is a seriously under-researched topic in South Africa, this article investigates the extent of underemployment according to these two definitions, before examining whether the characteristics of the two groups of underemployed are significantly different.     

Macroeconomic Uncertainty in South Africa

This paper develops a new index of economic uncertainty for South Africa for the period 1990–2014. The index is constructed from three sources: (1 ) Disagreement among professional forecasters, (2 ) a count of international and local newspaper articles discussing economic uncertainty in South Africa and (3 ) mentions of uncertainty in the quarterly economic review of the South African Reserve Bank. The index shows high levels of uncertainty around the period of democratic transition in 1992–1994, the large depreciation of the currency in 2001 and the financial crisis of 2008. The uncertainty index is a leading indicator of a recession. An unanticipated increase in the index is associated with a fall in GDP, investment, industrial production and private sector employment. Contrary to evidence for the U.S.A and the U.K., uncertainty shocks are inflationary. These results are robust to controlling for global uncertainty shocks, consumer confidence and financial shocks.     

An investigation into food-away-from-home consumption in South Africa

Food policy that ignores food-away-from-home (FAFH) in a developing country like South Africa will be misleading given changes in demand for food over time. This study contributes to our understanding of the factors that influence the demand for FAFH in South Africa. Using panel data from the Income and Expenditure Survey, this study analyses the effects of income and socio-demographic variables on FAFH expenditure using a double-hurdle model. The results show that small-sized households headed by younger white females/males and living in an urban settlement are most likely to purchase FAFH while male-headed households spend more than female-headed households. Furthermore, income of the household head is an important determinant of household FAFH expenditures. The income elasticity of expenditure on FAFH is inelastic and a normal good. The small size of the participation elasticities means that growth in the FAFH sector will be driven by households with existing expenditure.     

Inflation in South Africa: An Assessment of Alternative Inflation Models

We consider the relative empirical performance of a range of inflation models for South Africa. Model coverage is of Phillips curve, New Keynesian Phillips curve, monetarist and structural models of inflation. Our core findings are that the single most robust covariate of inflation is unit labour cost. We further decompose unit labour cost into changes in the nominal wage and real labour productivity. The principal association is a strong positive relationship between inflation and nominal wages, while improvements in real labour productivity report only a relatively weak negative association with inflation. Supply‐side shocks also consistently report an association with inflation. As to demand‐side shocks, the output gap does not return a robust statistical association with inflation. Instead, it is growth in the money supply and government expenditure which return robust and theoretically consistent associations with inflationary pressure.     

One Kind of Freedom: Poverty Dynamics in Post-apartheid South Africa

A 1993 South African living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity. Drawing on a 1998 re-survey of households in the 1993 study, this paper explores whether this legacy has been superseded, or whether apartheid's end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape. After proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions, the paper goes on to estimate that significant numbers of the South African poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time.     

National and Regional Impacts of an Increase in Value-Added Tax: A CGE Analysis for South Africa

The South African National Treasury expected a revenue shortfall of R48.2 billion in 2017/18 and proposed tax policy measures to raise an additional R36 billion in 2018/19. A key component to raise the additional revenue was a 1% point increase in the VAT rate to 15% effective from 1 April 2018. The increase in the VAT rate was not welcomed as it would increase the cost of living, especially for the poor. We investigate the potential economy-wide and regional impacts of raising VAT and increasing public spending on education and health. We do this by developing and applying a multi-regional model of the South African economy that includes detailed tax and spending features. In this model, when we increase VAT, the impacts are driven by the direct shock to the model, accompanied by differences in regional economic activity. We find that effects on GDP vary between regions but are generally negative.     

Masculinities and gender-based violence in South Africa: A study of a masculinities-focused intervention programme

Violence, and particularly gender-based violence (GBV), has become an increasingly serious problem in the democratic era in South Africa. While numerous suggestions have been offered for why this is the case, a growing body of literature links the perpetration of violence and GBV to the expectations of men’s prescribed gender roles, or their masculinities. In response to this, some organisations have begun working specifically with men as a violence prevention mechanism, through the use of masculinities-focused interventions. This paper uses a South African example as a case study, looking primarily at how men who participate in the intervention understand masculinities and violence, and the impact that the intervention has on this understanding. Results suggest that violence has become largely normalised in the country, but that the intervention can play a role in beginning to problematise that normalisation.     

Maternal education and child health outcomes in South Africa: A panel data analysis

This study empirically assesses the relationship between mothers’ education and child health using continuous and binary proxies of child health outcomes. A panel, using four waves of the National Income Dynamic Study and a battery of estimation techniques, was employed. The results suggest that maternal education plays a large and significant role in explaining child health outcomes in South Africa. Our results also suggest that maternal education is relevant in respect to stunted growth (stunting). However, the effects of maternal education vary along races, implying levels of inequality. The effects are stronger in the black and coloured populations, possibly due to educational deficits. This suggests a need in improving the educational opportunities for these groups. We suggest that maternal education can significantly contribute to reducing the high degree of inequality in South Africa.     

Infrastructure and Growth in South Africa: Direct and Indirect Productivity Impacts of 19 Infrastructure Measures

Empirical explorations of the growth and aggregate productivity impacts of infrastructure have been characterized by ambiguous (countervailing signs) results with little robustness. This paper, utilizing panel data for South African manufacturing over the 1970–2000 period, and a range of 19 infrastructure measures, explores the question of infrastructure endogeneity in output equations. The paper develops an instrumentation strategy generalizable to other contexts. Controlling for the possibility of endogeneity in the infrastructure measures renders the impact of infrastructure capital not only positive, but of economically meaningful magnitudes.     

A Sticky Information Phillips Curve for South Africa

Mankiw and Reis propose the Sticky Information Phillips Curve (SIPC) as an alternative to the standard New Keynesian Phillips Curve to address empirical shortcomings in the latter. A SIPC for South Africa is estimated, and we find estimates of information updating probability between 0.69 and 0.81, somewhat higher than suggested by methods using micro‐evidence. Because the estimation requires data on expectations of current period inflation and output gap conditional on sequences of earlier period information sets, we provide a detailed analysis of the impact on our estimates of alternative proxies available in South Africa.     

Youth unemployment in South Africa revisited

One of the most pressing socio-economic problems of the South African economy is high youth unemployment. Recent studies only briefly examined how youths have fared since the transition by comparing the 1995 October Household Survey with a Labour Force Survey, and hardly investigated whether the discouraged workseekers are different from the unemployed. This paper re-examined youth unemployment trends in the 2008–12 Quarterly Labour Force Surveys, before comparing the characteristics of discouraged workseekers and narrow unemployed. Whether different policies are needed to boost youth employment in each group is also discussed.     

The Child Support Grant and teenage childbearing in South Africa

This paper examines data on teenage fertility and patterns of uptake of the Child Support Grant in South Africa from 1998 to 2005, to assess how far this Grant is associated with the trend in teenage childbearing. Teenage fertility was fairly high during the 1980s when state financial assistance to teenage mothers did not adequately serve the majority of South Africans. Since the first half of the 1990s, however, teenage fertility has steadily declined. This trend was already underway when the grant was expanded in 1998 to reach beneficiaries in all sub-groups of the national population. If teenage girls were having children primarily to benefit from the Child Support Grant, then more would be making claims than is in fact the case. The findings of this study do not suggest any significant positive association between the grant and the trend in teenage childbearing in South Africa during the past decade.     

Microeconomic determinants of spatial mobility in post-apartheid South Africa: Longitudinal evidence from the National Income Dynamics Study

Migration, important for many areas in development, is strongly related to employment. Debate over labour supply in developing countries frequently hinges on labour migration. This paper examines the determinants of spatial mobility of working-age adults in South Africa, using the first nationally representative longitudinal survey – the National Income Dynamics Study – for 2008–10. The paper outlines the unique advantages of these data for the study of individual mobility – data that open the possibility of a new research project. Specifically, it asks how policy-relevant programmes, such as social transfers and housing assistance, affect migration. This paper finds, on balance, that transfers are negatively correlated with subsequent relocation. Previous migration is also predictive of future migration and both are tightly related to attrition, while there is an increasing but strongly non-linear relationship between income and mobility. Further, we highlight potential pitfalls – including attrition, and definitional difficulties – in the study of migration and illustrate possible solutions.     

Nature and determinants of household retirement savings behaviour in South Africa

This study investigates the savings behaviour among South African households using the General Household Survey data for the periods 2002–04 and 2008–10. The age-cohort analysis shows that households achieve their income peaks when the household heads are in their early forties, earlier than in most other countries. Although initial support for the life-cycle hypothesis framework in the form of smoothed consumption was found from multivariate analysis, a closer examination reveals that the consumption–income ratio is also smooth over the age and cohort variables. This indicates that savings rates do not follow a hump-shape pattern as required in the life-cycle hypothesis framework. While households are seen to be able to maintain their consumption in retirement years through government grants, a large portion of the grants seem to be utilised for savings. This shows that the government grants have the dual effect of sustaining consumption levels while disincentivising savings during working years.     

Globalisation,poverty and corruption: Retarding progress in South Africa

ABSTRACT

Poverty and corruption can both immiserate a nation. Globalisation through open trade can potentially increase economic growth, providing employment and increased incomes to the poor. Corruption can dampen or even reduce these positive developments. Although globalisation is considered instrumental in development strategies, theoretically, the impact of globalisation on poverty reduction is ambiguous, an ambiguity that is also reflected in the empirical literature. The corruption-poverty literature clearly reveals that empirical findings on such association are at best heterogeneous. This article examines the effects of globalisation and corruption on poverty using time series data for South Africa for the period 1991–2016. Three indicators of poverty and recently developed measures of globalisation and corruption were employed in the logistic regression model used for estimation. The results confirm that globalisation reduces poverty while corruption intensifies it. The globalisation findings are robust across the different measures of poverty while unidirectional results show corruption increases poverty.     

Challenges facing international projects for entrepreneurial development in South Africa

International development projects that support entrepreneurship face a number of challenges, not least because they need to integrate different paradigms. Based on the case study of a Canadian non-governmental organisation in South Africa, this paper provides an exploratory assessment of these challenges and highlights four major factors that affect the success of such international projects: transposing a northern business model to the south; developing local roots and adapting to the local context; balancing the allocation of resources between managing the project and providing services to entrepreneurs; and aligning the cultures of the private sector and international development agencies. In practical terms, the findings provide benchmarks for the success of these projects and could help improve interventions that encourage entrepreneurship in developing countries.     

Progress through school and the determinants of school dropout in South Africa

The release of the National Income Dynamics Study Wave 2 provides the first nationally representative longitudinal data collected in South Africa, making it possible to study transitions in and out of school, across grades and into work, in ways not previously possible. We illustrate the high levels of grade repetition evident in South African schools and show how school completion presents a significant hurdle with very few youth successfully matriculating. Exit from school does not offer any advantages as most youth find themselves idle once they have left school. Our regression analysis investigates correlates of school dropout and shows that falling behind is a key determinant of school dropout, even after controlling for school quality and socio-economic status. Those behind but attending higher quality schools are partially protected from dropping out. Some evidence that credit constraints may be related to dropout is found, especially among males.