Trade‐Induced Unemployment: The Case of Post‐Apartheid South Africa

This paper analyses the link between changes in trade flows and labour demand in post‐apartheid South Africa (1994–2006). Although this is not the first research with regard to this topic, it is one of the few that uses a consistent trade framework. Based on a three‐dimensional Heckscher–Ohlin trade model, a theoretical framework is constructed to analyse this link. Whereas it is impossible to test the theoretical link directly because of data limitations, an indirect econometric test supports the findings of the model. This implies that the combination of increased trade and labour market rigidities was unfavourable for labour opportunities.     

The Elasticity of Taxable Income: The Case of South Africa

A key tax policy parameter that has received much attention in the international literature, but about which there is substantial uncertainty, is the overall elasticity of taxable income. The size of this parameter is central to the formulation of tax and transfer policy, as well as for the study of the welfare implications of tax decisions. This paper uses a panel of individual tax returns for the period 2009–2013 and the phenomenon of “bracket creep” to construct instrumental variable estimates of the sensitivity of income to changes in tax rates. Estimates suggest that the overall elasticity of taxable income is approximately 0.3, while that of broad income is significantly lower. The overall response is primarily driven by the elastic response of taxable income for high‐income earners, who have an elasticity of closer to 0.4. Using the elasticity estimates within an optimal tax framework, it is determined that the optimal marginal tax rate for the top 10% of income earners is broadly in line with the current income tax schedule. However, results also suggest that there is little scope for raising marginal rates on high‐income earners further without inducing a negative revenue response.     

The Determinants of Time‐Varying Exchange Rate Pass‐Through in South Africa

The pass‐through of shifts in the rand exchange rate to consumer price inflation has been well documented for South Africa. Although estimates of the absolute level of pass‐through vary, some studies document a decline in pass‐through over time. In order to better illuminate the policy implications of pass‐through, this paper seeks to add to the literature by decomposing pass‐through into a number of time‐varying impulses. This has the advantage of providing deeper insights of pass‐through over time and across various monetary policy regimes. We then analyse the determinants of time‐varying pass‐through. Our results confirm that pass‐through has declined over time but is subject to a stable and low inflation environment. We also show that a volatile exchange rate leads to higher pass‐through.     

Remittances' Influence on Housing Construction Demand in Sub‐Saharan Africa: The Case of Kenya

Abstract: Although it is well documented that immigrants maintain economic and social ties with their communities of origin through remittances, the role of remittances in asset acquisition for most African countries is yet to be documented. This study provides empirical estimates for the impact of remittances from abroad on housing construction demand in Kenya using time series data for the period 1970–2008. An autoregressive distributed lag (ARDL) modelling process is employed to capture the effect of remittances and other variables on housing construction demand. The computed short‐ and long‐run elasticities indicate that inbound remittances are one of the determinants of housing construction demand in Kenya. Other significant determinants include income, interest rates and urbanization growth.     

The Wage Rate and the Worker's Productivity: the Case of the Japanese Chemical Industry

The purpose of this paper is to analyze the relationship between the wage rate and the productivity of the blue-collar worker in Japan. In this paper, micro data from a factory of chemical industry in Japan is used for our empirical study. Our empirical results indicate that, if the index of the labor productivity is an appropriate index of the labor productivity, the labor productivity plays a crucial role in the determination of the wage rate in a particular Japanese chemical factory of the 1960s.     

The Declining Value‐relevance of Accounting Information and Non‐Information‐based Trading: An Empirical Analysis*

Recently, a growing body of literature has suggested that financial statements have lost their value‐relevance because of a shift from a traditional capital‐intensive economy to a high‐technology, service‐oriented economy. These conclusions are based on studies that find a temporal decline in the association between stock prices and accounting information (earnings and book values). This paper empirically tests a theoretical prediction arising from the noisy rational expectations equilibrium model that suggests that the decline could be driven by non‐information‐based (NIB) trading activity, because such trading reduces the ability of stock prices to reflect accounting information. Specifically, Dontoh, Radhakrishnan, and Ronen (2004) show that when NIB trading increases, the R²s of a regression of stock price on accounting information declines. Our empirical tests confirm this prediction; that is, the decline in the association between stock prices and accounting information as measured by R²s is driven by an increase in NIB trading.     

Remaining at the margins: Case study of farmworkers in the North West Province,South Africa

This article explores living conditions, livelihoods and prospects of farmworkers with regard to land reform legislation. Research was conducted from 2004 to 2010 on four farms in the North West Province, interviewing farmworkers and farm owners. Representatives of the agricultural union Agri North West and land analysts were interviewed to obtain their perspective on farm labour. Despite protective legislation, farmworkers' living and working conditions have deteriorated. Farmworkers further lack alternative livelihood options, perpetuating their dependency on farm owners, who are the only ones providing services and some social security. Among the main barriers in the empowerment of farmworkers are limited insights regarding complex social relationships on farms, the challenge to address the specificity of power relations, and the marginalised position of farmworkers and their lack of agency in the broader political system. Both farmworkers and farm owners need support structures and strengthened institutional capacity to gradually change power dynamics.     

Terrorism and its Determinants in the Sub‐Saharan Africa Region: Some New Insights

Terrorism is undesirable as it adversely affects the economic development of countries. This study explores the determinants of terrorism in 29 countries of sub‐Saharan Africa (SSA). The data is extracted from reliable sources spanning over 2005 to 2016. Econometric techniques relevant for panel data that control for unobserved heterogeneity (fixed effects) and endogeneity (generalized method of moment) are employed to estimate the specified models. The results indicated that low growth in per capita incomes along with political instability are the main driving forces responsible for terrorism. Similarly, military expenditures are influencing terrorism positively whereas corruption has impacted terrorism negatively in the SSA region. Further, the growth of both physical as well as human capital reduces terrorism. The paper suggests that the region should take appropriate steps for increasing income of the population, education and capital stock, along with ensuring political stability to eradicate terrorism from the region.