Does Human Capital Protect Workers against Exogenous Shocks? Evidence from Panel Data on South Africa during the 2008‐2009 Crisis

The financial and economic crisis of 2008 and 2009 took a heavy toll on the South African economy. The economy contracted for the first time since 1998 and entered recession during the fourth quarter of 2008. The gross domestic product contraction was soon transmitted to the labour market. Between the second quarters of 2008 and 2009, employment fell by 3.8%. However, not all individuals were hit with the same intensity. Using panel data from a quarterly labour force survey unique in the African context, we find that human capital (i.e. education as years of schooling and workforce experience) provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital and helps identify the unskilled as having the greatest need for social safety net interventions during a recession.     

Numerical pricing of American options under infinite activity Lévy processes

Under infinite activity Lévy models, American option prices can be obtained by solving a partial integro‐differential equation (PIDE), which has a singular kernel. With increasing degree of singularity, standard time‐stepping techniques may encounter difficulties. This study examines exponential time integration (ETI) for solving this problem and the performance of this scheme is compared with the Crank–Nicolson (CN) method and an implicit–explicit method in conjunction with an extrapolation (IMEX‐Extrap), in terms of computational speed and convergence orders. These findings indicate that ETI is faster and more accurate among PIDE‐based methods for solving the system of ordinary differential equations resulting from spatial discretization of the PIDE. For very singular problems, it is shown that the IMEX‐Extrap scheme becomes unfavorable compared with the other schemes as it is relatively more time consuming and the global convergence deteriorates from quadratic to linear, whereas the ETI scheme yields both point‐wise and global quadratic convergence. For illustration, under the infinite variation process, the IMEX‐Extrap achieves a precision of the order of 10^?4 in 663.016 s, whereas for the same set of parameters, the CN method and the ETI scheme reach an accuracy of the order of 10^?5 in 237.891 s and 22.772 s, respectively. © 2010 Wiley Periodicals, Inc. Jrl Fut Mark 31:809–829, 2011     

Debt Relief and Social Services Expenditure: The African Experience, 1989–2003

Abstract: In June 2005 the G8 proposed the Multilateral Debt Relief Initiative (MDRI) with the goal of canceling all International Development Association (IDA), International Monetary Fund (IMF) and African Development Fund (ADF) debt claims on countries that have reached, or will eventually reach, the completion point under the enhanced Highly Indebted Poor Countries (HIPC) initiative. The objective is to help HIPC make progress towards the Millennium Development Goals. The G8 initiative is worth $40 billion and would benefit 14 African countries immediately. It has the potential of freeing more resources than any past debt relief program. Between the 1988 Paris Club debt relief program up to 2003, Africa earned debt relief worth $65 billion. We take a critical look at the chances that the G8 initiative will reach its goals by empirically investigating the extent to which past debt relief granted to African countries did translate into a larger share of resources being allocated to social services expenditure. Our estimates indicate that debt relief provided to Africa between 1989 and 2003 had a positive impact on the share of a country's resources allocated either to public education or health in countries which have improved their institutions. Consequently, donors must address the need for institutional change as they grant debt relief to HIPC if the latter are to channel the freed‐up resources to the social sector.     

Slave prices from succession and bankruptcy sales in Mauritius, 1825–1827

We construct a unique data set from succession and bankruptcy sales in Mauritius to investigate the determinants of slave prices between 1825 and 1827. We find that males, females sold with children, skilled slaves and slaves sold during the peak sugar cane harvest season all fetched higher prices. In comparison, handicapped and non-native slaves were sold at a discount. Moreover, the young child premium increased over the period. This may indicate that slave owners did not anticipate that slavery would be abolished in the near future or thought that they would be compensated in such an event.