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Wages and Wage Inequality in South Africa 1994–2011: Part 2 – Inequality Measurement and Trends
No full textWe analyse the long‐term trends in wage inequality in South Africa, using household survey data. We show that the trends in household income inequality are largely driven by changes in wage inequality. Given the detailed nature of our series we show that measurement issues and breaks in the series need to be dealt with in order to draw robust conclusions from the data. Most standard inequality measures show that wage inequality has increased over the period. Nevertheless the choice of measure matters, because there are different trends in different parts of the distribution. It appears that the distribution below the median has become more compressed, while the top of the wage distribution has moved away from the median. The inequality in the labour market translates into even higher inequality in society given that high earners tend to live together with other high earners while low wage individuals often end up sharing their incomes with the unemployed. Furthermore there are many South Africans with access to no wage income. Given the trends analysed here it is not surprising that overall inequality in South Africa has not come down or has even increased since the end of apartheid
Assessing the usability of the Western Cape Graduate Destination Survey for the analysis of labour market outcomes
No full textGraduate Destination Studies have the potential to provide detailed information about graduate transitions to work that cannot easily be collected in household surveys. However, response rates are typically very low and raise the concern that the nonresponse is not random and inferences using data on those who respond will be inaccurate. This study examines response rates in the Western Cape Graduate Destination Study where 22% of all 2010 university graduates from the four Western Cape universities were successfully interviewed in 2012. We examine differences in observable baseline characteristics, assess the extent of non-response bias for a labour market participation analysis, compared rates of continued study to those in the HEMIS database and implement a selection correction methodology that uses type of email address as an exclusion restriction. We find that those who successfully responded to the survey are more likely to be studying in 2012 and have some systematically different baseline information that signals that response is not random. Our selection correction methodology however finds limited impact for an equation of employment. This study provides important input into plans for a national destination study. We recommend that focus be taken in preparing and standardising the sampling frame and that detailed records of the survey process be kept. In addition, we illustrate the potential benefits of linking graduate destination study data with administrative resources to assess bias and supplement the survey information obtained.This research was conducted as part of the Labour Market Intelligence Partnership, research consortium headed by the Human Sciences Research Council (South Africa) and funded by the Department of Higher Education and Training (South Africa)
The dynamics of poverty in South Africa (updated, version 3)
No full textWe analyse the determinants of South Africans moving into and out of poverty over the first four waves of the National Income Dynamics Study (NIDS) for the years 2008 to 2014/2015. The first descriptive sections of the study focus on the balanced panel of NIDS respondents and find that a relatively high poverty exit rate was accompanied by a substantial proportion of the population being trapped in severe poverty. The roles of demographic versus income changes over time reveal that changing household composition is the largest trigger of poverty entry and exit, and that increasing income from government grants is the main trigger precipitating poverty exit for about one quarter of our sample. We then estimate an endogenous switching model that controls for initial conditions and selective attrition on the full sample of respondents in order to better understand what traps South Africans in poverty. We find that ignoring the correlations between the unobservables affecting initial conditions, sample retention and poverty transitions can lead to substantially biased results, and that there is significant genuine state dependence underlying poverty dynamics. This has important policy implications, as preventing people from falling into poverty in the first place is likely to yield greater returns that targeting the individual correlates of poverty directly.Arden Finn: [email protected] Doctoral student and researcher at the Southern Africa Labour and Development Research Unit, University of Cape Town.
Murray Leibbrandt: [email protected] Professor of economics and director of SALDRU at the University of Cape Town.
Acknowledgements:
Both authors acknowledge financial support from the Programme to Support Pro-poor Policy Development in the Department of Planning Monitoring and Evaluation.
Arden Finn acknowledges the National Research Foundation for financial support for his doctoral work through the Chair in Poverty and Inequality Research.
Murray Leibbrandt acknowledges the Research Chairs Initiative of the Department of Science and Technology and National Research Foundation for funding his work as the Chair in Poverty and Inequality Research
Private schools and student learning achievements in Kenya
No full textThis paper examines the effect of private schools on literacy (language) and numeracy (maths) skill acquisition among children drawn from lower primary grades in Kenya. We use a comprehensive household survey data that allows us to apply a number of econometric techniques to deal with the challenge of the endogeneity of private school choice. We begin with the OLS as a baseline model. We then estimate the village and household fixed effects (FE) models that control for unobservables at the village and household levels, respectively. We supplement the OLS and FE models with the propensity score matching (PSM) technique.
We find positive and signi cant private school effect throughout all these methodologies. However, assessing the impact of omitted variable bias on the estimated coefficient of private schools by use of recent techniques, we find that the estimated bias in household FE is quite small in magnitude relative to the bias based on other estimation techniques. Since (private) schooling decision is made at the household level, it is likely that a substantial part of the unobservable component is pertaining to the household.This work is funded by the African Economic Research Consortium (AERC)
Gender and birth order effects on intra-household schooling choices and education attainments in Kenya
No full textIn this paper, we investigate the effect of two important family characteristics - gender and birth order- on intra-household investments in, and educational outcomes of, children in Kenya. We measure intra-household education investments in children by household's decision to enrol children in private schools and educational outcomes by two variables, completed years of education and relative grade attainment. We use a large household survey data that allows us to apply the family fixed effects models that address the potential endogeneity of children's gender and family size as well as factors that are unobservable at the household
level. Although we do not find an intra-household gender preference in terms of investments in children's education, there is a female advantage in terms of the two measured education outcomes. Such female advantage is in contrast with literature generally reported from developing countries. It is, however, in line with global trends which show that more girls are getting educated and the gender gap in education has narrowed considerably. Regarding birth order effects, we find significant negative birth order effects on private enrolment, completed years of education and relative grade attainment. The negative birth order effects are not in line with the evidence from many other developing countries but are in line with results from developed countries. Our results are robust to different sample restrictions. We find that household wealth plays a significant role in propagating the birth order but not the gender effects we observe
Economics and Transformation: Measurements, Models, Maths and Myths
No full textSALDRU and DataFirst have been at the forefront of measuring poverty and inequality in South Africa. We don’t however often enough try to sketch out the “big picture” as to why we do this and what we may have learned. Five years ago I tried to do this in my inaugural lecture. It turns out that everything said in that lecture is still relevant, if not more so. At the time of the lecture there were still some people who were under the impression that the warnings about the problems of unemployment and inequality were overblown. Eight days later the massacre at Marikana happened. I can’t claim to have foreseen it; nor did I have an inkling that my warning that we were sitting on a powder keg would be confirmed so rapidly.
Although the material is still relevant, the text was designed for a public performance, one which connects to the old rituals and traditions of Universities. One way of reflecting on that was to structure the text like a classical symphony: after the tune-up (in the preamble), a fast movement, followed by a slow one, then a dance and a finale that goes back to themes raised in the intro. While traditions may shape what we do, I was trying to show that one can also innovate on them and given them new content. Furthermore drawing on the strengths in some of these traditions, in my case the memory of my father, is important in moving forward. At the time none of us knew that he was suffering from pancreatic cancer and that my inaugural would be his last major public engagement.
While a record of the “performance” has been available for some time (it can be viewed on YouTube ) the text was never released, partially because I had intended to polish and expand on it.Martin Wittenberg’s 2012 inaugural lecture is being published as a SALDRU working paper due to its important examination of “big picture” trends in poverty and inequality, which remain consistent five years later. The lecture draws on comprehensive research undertaken by SALDRU and DataFirst
This is a joint SALDRU Working Paper and DataFirst Technical Paper
The impact of microhydroelectricity on household welfare indicators
No full textThe use of small-scale off-grid renewable energy for rural electrification is now seen as part of the sustainable energy solutions. The expectation from such small-scale investment is that it can meet the basic energy needs of a household and subsequently improve some aspects of household welfare. However, these stated benefits remain largely hypothetical because there are data and methodological challenges in existing literature attempting to isolate such impact. This paper uses field data from microhydro schemes in Kenya, and propensity score matching technique to demonstrate such an impact. We find that on average, households connected to microhydroelectricity consume 1.5 l less of kerosene per month compared to households without any such electricity connection. In addition, non-connected households spend 0.92 USD more for recharging their cell phone batteries per month in comparison to those who were using microhydroelectricity service. Finally, school children from households that are connected to microhydroelectricity were found to devote 43 min less on evening studies compared to those without electricity. The findings provide interesting insights to some of the claims made for or against use of off grid renewable energy for rural electrification
Decomposing changes in household measures: Household size and services in South Africa, 1994–2012
No full textBackground: Household trends are generally tracked by means of repeated cross-sections, such as censuses or nationally representative surveys. However, the trends may be driven either by changes within households over time or the way in which the processes of household formation/dissolution interact with the measure in question.
Objective: We aim to develop a method that enables us to apportion changes in a household measure to changes that happen within households and changes that occur due to household formation and dissolution. In particular we intend to show how South African households have reduced in size and how access to services has increased.
Methods: We develop a formula for decomposing a household outcome measure. We apply the formula to household size and electricity access data from the Agincourt health and demographic surveillance site for the period 1994 to 2012. We also apply it to the National Income Dynamics Survey of South Africa from 2008 to 2012. We compare the results to the pattern derived from nationally representative surveys run by Statistics South Africa since 1994.
Results: The overall reduction in household size is fuelled by rapid household formation, much of which is intertwined with shifts in location. Access to services has been reduced by the process of new household formation. Neither finding is evident from cross-sectional data.
Contribution: We introduce a new decomposition technique which can be used with longitudinal data and discuss the insights that it provides
How does a change in the excise tax on beer impact beer retail prices in South Africa?
No full textThis paper uses price data, collected by Statistics South Africa, to estimate the effect of a change in the excise tax on the retail price of beer. We find strong evidence that the excise tax on beer is overshifted to consumers. The pass-through coefficient is estimated at 4.83 (95% CI: 4.02; 5.64) for lager, and at 4.77 (95% CI: 4.04; 5.50) for all beer (which includes dark beer). This implies that for every R1/unit increase in the excise tax, the retail price increases by about R4.80/unit. Of the 23 brand-packaging combinations considered, the pass-through coefficients vary between 2.39 and 10.05 (median = 5.30). The majority of the price change in response to a tax change occurs immediately, and prices have fully adjusted two months after the excise tax increase becomes effective. Pass-through differs substantially across packaging types. The pass-through coefficient on 750ml bottles is substantially lower than that of 330 ml (or 340 ml) cans and 6 x 330 ml (or 6 x 340 ml) “six-packs”. The overshifting of the excise tax has positive implications for public health policy, since they increase the effectiveness of alcohol taxes as a tool to reduce the (excessive) consumption of beer
Dictators Walking the Mogadishu Line: How Men Become Monsters and Monsters Become Men
No full textHistory offers many examples of dictators who worsened their behaviour significantly over time (like Zimbabwe’s Robert Mugabe) as well as dictators who displayed remarkable improvements (like Jerry Rawlings of Ghana). We show that such mutations can result from rational behaviour when the dictator’s flow use of repression is complementary to his accumulated stock of wrongdoings. Interacting this complementarity with uncertainty over the dictator’s degree of impunity in relation to wrongdoing (such that the dictator becomes inclined to experiment along this dimension), produces an environment in which any individual rising to power can end up as either a moderate leader, or as a dreaded tyrant. Our model shows that dictators are more likely to derail with higher levels of divertible funds available, for example stemming from fungible aid inflows or from the exploitation of natural resources. It furthermore suggests that derailment is accidental and that such leaders suffer from ex-post regret. Consequently, increasing accountability can be in the interest of both the public and the dictator.Shaun Larcom: Department of Land Economy, University of Cambridge, 6-21 Silver Street, Cambridge CB39EP, United Kingdom. Tel.: +44 20 3073 8320. E-mail: [email protected]. Corresponding author.
Mare Sarr: School of Economics, University of Cape Town, Private Bag X3, Rondebosch 7701, South Africa. Tel.: +27 21 650 2982. Email: [email protected].
Tim Willems: Nuffi eld College, and Department of Economics, University of Oxford, Manor Road Building,
Manor Road, Oxford OX1 3UQ, United Kingdom. Also a member of the Centre for Macroeconomics. Tel.:
+44 75 076 729 84. E-mail: [email protected]