Poverty in South Africa – a statistical analysis

Poverty is one of the major challenges facing democratic South Africa. This article focuses on poverty in South Africa, using the Income and Expenditure Survey conducted in 1995 by Statistics South Africa (formerly the Central Statistical Service). In the first part, different approaches that can be followed in the measurement of poverty are discussed. In the second part, Sen's approach to the measurement of poverty and the Chi-square Automatic Interaction Detection (CHAID) technique have been used to analyse the above data. CHAID is used to explore the relationship between the poverty status of the household (ie poor or non-poor) and other household characteristics. These variables can then be used as predictors of poverty status.     

Inflation-Output Trade-Off in South Africa: Is the Phillips Curve Symmetric?

This study sets out to investigate whether the inflation-output trade-off in South Africa is symmetric or asymmetric; and if asymmetric, whether it is convex or concave. A New Keynesian dynamic stochastic general equilibrium model calibrated on South African data reveals that a negative demand shock reduces inflation and output while a positive demand shock of the same magnitude leads to a smaller increase in inflation and a larger increase in output, indicating that the inflation–output relationship in the country is concave asymmetric. These findings corroborate estimation results of the inflation-expectations augmented Phillips curve conducted using difference GMM on quarterly data.     

Tax(i)ing the Poor? Commuting Costs in South African Cities

In this paper, I describe the monetary and time costs of commuting to work in South African cities, and how these have changed in the post‐Apartheid era. I interpret these results in light of a paper by Brueckner, who used a simple urban model to suggest that location and commuting patterns by race could change as a result of the repeal of Apartheid era legislation such as the Group Areas Act that made it impossible for black South Africans to live near the centre of cities. A key finding is that monetary and time costs of commuting in South African cities are high and have increased in the post‐Apartheid period. Journey times are much higher than the OECD country average and a sample of developing country cities. Part of the explanation for increasing average commute times is population growth in South African cities, which has been substantial. Both the population and number of commuters doubled between 1993 and 2013 in the six metropolitan municipalities (metros) analysed in this paper. Since commuting costs a substantial amount and generates negative externalities through congestion I also explore the financing of public transport.     

The debate on the future of the population census: Relevance for South Africa?

The cancellation of the Canadian census long-form questionnaire in 2010 and its subsequent reinstatement in 2015 resulted in a vigorous international debate on the future of the mandatory census. Questions concerning state invasions of personal privacy, party political interference and public trust and cooperation in state data-gathering were raised. As a result, alternative forms of demographic data collection were explored and the experiences of other countries examined. National population registers and non-mandatory surveys offered alternatives, but each had their own distinct disadvantages. South Africa has continued to conduct mandatory detailed censuses since 1994 and the enumerations have encountered little political opposition because they are presented as essentially nation-building exercises providing credible and relevant data, upon which national policies may be based and monitored. At present there is little incentive to change the current format of statistical collection in the absence of a viable alternative.     

Has the Exchange Rate Pass‐Through changed in South Africa?

This paper uses the two‐stage exchange rate pass‐through (ERPT) framework instead of the direct pass‐through (PT) from the exchange rate to consumer inflation to assess the variation in the ERPT for South Africa from 1994 to 2014. The paper uses rolling‐window estimation to examine the possibility of change in the ERPT over time. In addition, it investigates the asymmetric behaviour of the ERPT over the business cycle. The results indicate that the ERPT for South Africa is complete in the first stage but incomplete in the second stage. It implies that retailers do not pass all the cost to consumers. The first‐stage ERPT has declined slightly since the Global Financial Crisis. Weak domestic demand and possibly the concentration of firms in the manufacturing sector are the main forces behind this low PT. Moreover, there is evidence of asymmetry in the first‐stage ERPT in that it tends to rise in the upturn phase of the economy compared to the downturn. The second‐stage ERPT shows a considerable decline since the adoption of the inflation‐targeting regime. Similar to the first‐stage case, the PT is muted in the downturn but rises in the expansionary phase by about 10%.     

Measuring regional labour markets in South Africa: How robust are sub-national estimates from the Quarterly Labour Force Survey?

This article explores the limitations of using data from the Quarterly Labour Force Survey (QLFS) to estimate robust sub-national labour market indicators in South Africa. The precision of labour market indices in the QLFS is very sensitive to which geographic scale is examined – national, provincial or metro – and in each instance the size of the population of the province or metro. The results show that errors from sampling at regional and city levels may be prohibitively large although in some instances broad patterns between regions can be identified notwithstanding a fairly blunt instrument. The findings highlight the imperative to be transparent about sampling errors and to foster sensitivity within government, business and the public in general. This exercise is instructive for generating other regional socio-economic indicators that are based upon similar household sample surveys such as the General Household Survey, Living Conditions Survey and Income and Expenditure Survey.     

Public assets and services delivery in South Africa: Is it really a success?

Poverty alleviation remains a pressing concern for South African policy-makers. Implementing effective anti-poverty policies requires a clear understanding of the nature and extent of poverty. The extant literature on South African poverty dynamics shows a decline in the headcount ratio over the first decade of the twenty-first century. However, the prior research largely adopts a narrow money-metric approach, or uses multi-dimensional indices that include welfare indicators based on private assets (e.g. television sets) or those that are provided publicly (e.g. access to water). This paper uses multiple correspondence analysis to measure non-income poverty trends for the period 2005–12. The novelty in this undertaking lies in an attempt to include a measure of the perceived quality of public assets and services to complement the standard indices. This provides some measure of ‘success’ of public service delivery, accounting for both changes in access and quality.     

Broiler production in South Africa: Is there space for smallholders in the commercial chicken coup?

It is agreed that agriculture provides avenues for impoverished households to produce and trade their way out of poverty. However, this requires market access and value chain integration of small-scale farmers. This paper explores the possibilities for integration of small-scale farmers into the mainstream commercial broiler value chain in South Africa. Production costs of small-scale producers are evaluated within the context of their commercial counterparts, with a case study approach. It revealed that small-scale producers pay more for inputs but also receive a substantial premium for sales of live birds in the informal market. This results in attractive gross margins for small-scale producers. There is, however, a production ceiling, due to demand and production considerations, associated with small-scale broiler production. This ultimately results in a dualistic industry with an informal (live sale) value chain at the one end of the spectrum and a sophisticated large-scale commercial value chain at the other. Given the salient production features and investment requirements associated with large-scale broiler production, organic growth from the small-scale value chain into the commercial value chain seems improbable. The dual nature of this industry should therefore be considered when developing policy geared towards development, poverty alleviation and value chain integration.     

How does the US credit crisis affect the Asia–Pacific economies?—Analysis based on a general equilibrium model

The current financial crisis differs from most post-war recessions in that the balance sheets of both households and banks have been severely damaged, which could lead to structural changes in the behavior of households. Therefore, it may exert some far-reaching effects on regional economies in the short run as well as in the medium term. This paper studies these effects using a multi-country dynamic structural model. In the short run, the US credit crisis weighs heavily upon the Asia–Pacific economies through financial linkages in addition to the traditional trade channel due to the deepening global financial integration. The relative importance of various financial channels differs notably across economies. While stock market contagion is more important for advanced economies, flight to quality across borders plays a key role in less developed economies. From a medium-term perspective, changes in the US household behavior caused by the credit crisis can help correct global imbalances, but the effectiveness hinges largely upon how long US households can maintain a reasonably higher savings rate. In addition, although the declining American public savings rate may not exert material impacts on the global imbalances, it can darken regional growth prospects due to a potentially higher world real interest rate.     

Does purchasing power parity survive political shocks in South Africa?

Does Purchasing Power Parity Survive Political Shocks in South Africa? — The objectives of the paper are to examine the Purchasing Power Parity (PPP) hypothesis for the South African economy during the period 1975–1994 using high-frequency data. The analysis is conducted both for the entire period and also for different subperiods in order to take into account possible structural changes. For the rand/ dollar exchange rate, the authors find on the basis of a unique long-run cointegrating relationship that there is significant evidence supporting the PPP hypothesis for the entire period. The use of nonlinear least squares and Johansen-Juselius procedures is made to reach the above conclusion.     

How complicated does the model have to be?

Simple macroeconomic models based on IS-LM have become unfashionablebecause of their lack of micro-foundations, and are in dangerof being effectively forgotten by the profession. Yet whilethinking about micro-foundations is a productive enterprise,complex models based on such foundations are not necessarilymore accurate than simple, ad-hoc models. Three decades of attemptsto base aggregate supply on rational behaviour have not displacedthe Phillips curve; inter-temporal models of consumption donot offer reliable predictions about aggregate demand. Meanwhile,the ease of use of small models makes them superior for manypractical applications. So we should not allow them to be drivenout of circulation.     

How does taste and quality impact on import prices?

Understanding the dynamics of import prices is an important but challenging issue that affects our assessment of welfare. We propose an exact import price index by extending the analysis of Broda and Weinstein (Q J Econ 121(2):541–585, 2006), who include growth in product variety in their calculations of import prices. While still relying on Armington’s (Int Monet Fund Staff Pap 16(1):159–178, 1969) definition of variety, we relax two assumptions, allowing the set of products and unobserved taste and quality parameter to vary. Our modified import price index shows that gains from variety in European G7 countries, although positive, are small compared with gains from taste and quality. Using food and tobacco products as a benchmark with unchanged taste and quality, we find significant gains from shifts in consumer preferences and improving quality for Germany, France, Italy and the UK between 1995 and 2012. By comparing results based on different benchmark groups we further flag the importance of consumer taste in international trade.     

Conference on development policies in Southern Africa: Was the future shaped?

The Development Society of Southern Africa held its biennial conference from 10—12 September at the University of Cape Town. The theme was ‘Development policies: Shaping the future of Southern Africa’. Fifty‐five papers were presented and discussed by some 350 people at plenary and parallel sessions. There was also a panel discussion, a number of lead‐in discussants, and a poster session; three conference newspapers containing the essence of the discussions were published and a number of videos on developmental and related topics were shown.

The question to be answered in this review is whether all these papers and other activities actually achieved what the conference set out to do: shaping the future development policy for Southern Africa.     

What about the race between education and technology in the Global South? Comparing skill premiums in colonial Africa and Asia

Historical research on the race between education and technology has focused on the West but barely touched upon ‘the rest’. A new occupational wage database for 50 African and Asian economies allows us to compare long-run patterns in skill premiums across the colonial and post-colonial eras (c. 1870–2010). Our data reveal three major patterns. First, skilled labour was considerably more expensive in colonial Africa and Asia than in pre-industrial Europe. Second, skill premiums were distinctly higher in Africa than in Asia. Third, in both regions, skill premiums fell dramatically over the course of the twentieth century, ultimately converging to levels long observed in the West. Our paper takes a first step to explain both the origins of the Africa–Asia gap and the drivers of global skill premium convergence, paying special attention to the colonial context that shaped demand, supply, and labour market institutions.     

Stipend-paid volunteers in South Africa: A euphemism for low-paid work?

Given the high unemployment rates in South Africa, the government has introduced policies to assist individuals to enter the job market, including stipend-paid volunteering. This research sought the views of stipend-paid volunteers and managers from four Johannesburg-based non-governmental organisations. The aims were to investigate whether stipend-paid volunteering was more like low-paid work than volunteering, the motivations for stipend-paid volunteering, the relationship between livelihood strategies and stipend volunteering, and the challenges and opportunities facing stipend-paid volunteers. It emerged that stipend-paid volunteers were initially motivated by extrinsic factors, such as the stipend, but later their volunteerism was sustained by intrinsic motivations, such as their community service orientation. While stipend-paid volunteering provided opportunities for training and experience, the work also presented challenges in terms of emotional stress, low remuneration and minimal support. Findings suggest that stipend-paid volunteerism would seem to be a euphemism for low-paid work.