EVALUATING THE GENERAL EQUILIBRIUM EFFECTS OF A WAGE SUBSIDY SCHEME FOR SOUTH AFRICA

Unemployment among semi‐ and unskilled labour has reached severe proportions (over 50%) and threatens the political and economic stability of the South African economy. In this paper a computable general equilibrium (CGE) model of the South African economy is used to assess the effectiveness of a wage subsidy in raising employment of semi‐ and unskilled workers. We find that employment of semi‐ and unskilled workers can be raised quite significantly. Further, the wage subsidy schemes compares favourably with alternative welfare grant schemes in terms of employment growth. However, the results are sensitive to the targeting of sectors and the substitutability between labour of different skill levels.     

THE IMPLICATIONS OF SOUTH AFRICAN ECONOMIC GROWTH FOR THE REST OF AFRICA

This paper measures the extent to which South African economic growth is an engine of growth in sub‐Saharan Africa. Results based on panel data estimation for 47 African countries over four decades suggest that South African growth has a substantial positive impact on growth in the rest of Africa, even after controlling for other growth determinants. The estimates are robust to the effects of global and regional shocks, changes in model specification, and sample period.     

THE IMPLICATIONS OF OECD GROWTH FOR SOUTH AFRICAN EXPORTS

This paper examines the role of OECD growth on South African exports using a vector error correction model. In the long run both OECD growth and the real effective exchange rate were found to influence South Africa's export performance, while in the short run, the real effective exchange rate was found to be an important driver of export growth. The policy implications that emerge from the study underscore the importance of fully exploiting current trading relationships, diversifying South African export destinations and enhancing competitiveness.