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Unconditional cash transfers and children’s educational outcomes: Evidence from the old-age pension programme in South Africa
No full textWe use longitudinal data from three waves of South Africa's National Income Dynamics Study to estimate the effect of pension receipt in the household on children's educational outcomes in South Africa. We find that children who co-reside with a pensioner achieve better educational outcomes than those who do not, while controlling for a wide number of individual and household characteristics. In particular, we find that the sex of the pension recipient matters - the positive impact on a child’s progression through school is greater if a female, rather than a male, receives the pension.We explore some of the possible mechanisms behind this, including differential school absenteeism rates and differential spending on non-fee schooling expenses.The authors would like to thank Nicola Branson, Murray Leibbrandt, Brendan Maughan-Brown, Vimal Ranchhod, and Ingrid Woolard. This paper benefi ted greatly from comments by participants at the SALDRU researchers reading group. All errors and omissions remain the sole responsibility of the authors.Jessica Standish-White acknowledges funding from the National Income Dynamics Study Bursary and the Sheila van der Horst Bursary.
Arden Finn acknowledges support from the National Research Foundation’s Human and Social Dynamics in Development Grand Challenge
Does tenure insecurity explain the variations in land-related investment decisions in rural Ethiopia?
No full textWe examine the relationship between land tenure security and land-related investments in rural Ethiopia. We control for both household heterogeneity and possible endogeneity of tenure security in estimating the impact of tenure security on investment. Empirical results show that variations in levels of tenure security do not explain the observed differences in investment behaviour among farm households in rural Ethiopia. In contrast, land size, access to labour and extension services, and location are seen to be important determinants of land-related investments. The results suggest that without addressing other barriers to investment, land reforms (titling) may not be sufficient to improve land-related investments.Muna Shifa: Post-doctoral fellow, Southern Africa Labour and Development Research Unit, University of Cape Town
Murray Leibbrandt: Professor, Southern Africa Labour and Development Research Unit, School of Economics, University of Cape Town.
Martin Wittenberg: Director, DataFirst and Professor, School of Economics, University of Cape Town. Muna Shifa would like to thank Carnegie Foundation for funding her PhD study at University of Cape Town, and the National Research Foundation (NRF) for funding her post-doctoral research. Murray Leibbrandt acknowledges the Research Chairs Initiative of the South African National Research Foundation and the South African Department of Science and Technology for funding his work as the Research Chair in Poverty and Inequality
The effect of non-personnel resources on educational outcomes: Evidence from South Africa
No full textLittle credible evidence exists on the effect of material resources on school quality in developing countries. This paper studies the impact of non-personnel funding on educational outcomes exploiting the peculiar way in which these resources are allocated in South Africa. Government funding follows quintiles constructed on the basis of school poverty scores. This creates discrete jumps in the allocation of funding and we use a regression discontinuity approach to analyze its effects on school outcomes
at the end of high school. Our results show a small but positive effect of resources on student throughput during the last years of high school, and on the number of students writing the matriculation exam. However, additional resources do not translate into a higher number of successful exams, leading to an overall negative effect on pass rates. We suggest that these findings may have to do with schools reacting to the per-pupil nature of funding.Miquel Pellicer, GIGA, Hamburg and SALDRU
Patrizio Piraino, University of Cape TownWe acknowledge funding from the EU's Seventh Framework Programme through the NOPOOR
project: "Enhancing knowledge for renewed policies against poverty". We would like to thank participants at the SALDRU seminar at the University of Cape Town, and at the RP3 GIGA seminar for useful comments. We are grateful to Rob Garlick for detailed and very useful feedback on an earlier draft. All errors are ours
Entrepreneurship and the Business Environment in Africa: An Application to Ethiopia
No full textPolicymakers in developing countries have recognized that productive entrepreneurship can help eliminate extreme poverty. This paper develops a search model of costly entrepreneurial start-ups under a constraining business environment and skill gaps, where one of the equilibrium outcomes is a low-productivity trap. The model reflects stylized facts from the urban labor markets in low income countries such as Ethiopia where low rates of productive entrepreneurship coexist with high output growth in some sectors. Creating an enabling business environment could help move the economy into the high-productivity equilibrium if the regulatory improvements are substantial and other bottlenecks such as skill gaps addressed. We test the role of the business environment in entrepreneurial sales on data from a recent World Bank survey of enterprises in Addis Ababa.The authors thank Emerta Asaminew and Andreas Wörgötter for comments. Special thanks go also to Zorobabel Bicaba for help with the regression tests. This paper is an updated and substantially expanded version of the IZA Discussion Paper No. 7553 and the William Davidson Institute Working Paper No. 1000. The views expressed are those of the authors and do not necessarily reflect those of the African Development Bank
Measuring inequality by asset indices: A general approach with application to South Africa
No full textAsset indices have become widely used in a number of areas of social research, particularly in the analysis of Demographic and Health Surveys. Indeed the calculation of “wealth indexes” is now routine practice in the DHSs. Asset indices have been externally validated in a number of contexts. While these indices have been shown to work well as proxy measures of poverty, they are not suited to investigate inequality. In this paper we will show that, in fact, typical asset indices also fail an internal validity test: they frequently rank individuals in ways which violate the basic principle that individuals that have more (of anything) should be ranked higher than individuals that have less. We consider from first principle what sort of indexes might make sense, given the predominantly dummy variable nature of asset schedules. We show that there is, in fact, a way to construct an asset index which does not violate some basic principles and which also has the virtue that it can be used to construct “asset inequality” measures. However, there is a need to pay careful attention to the components of the index. We illustrate this by discussing the asset indices released publicly with South African DHS data and then a South African case study of changes over time. Both situations show the perils of mechanical approaches to calculating indexes. When calculating inequality using asset indices on South African data we find high inequality in the DHS data but that inequality has decreased markedly between 1993 and 2008. This contrasts with findings derived from income data which suggest that inequality has hardly changed at all.Martin Wittenberg - Director of DataFirst and Professor in the School of Economics, University of Cape Town
Murray Leibbrandt - Director of SALDRU and holder of the DST/NRF National Research Chair of Poverty and Inequality Research.
This is a joint SALDRU Working Paper and DataFirst Technical Paper
Fertility and mother's labour market behaviour: Evidence from the 2011 South African Census
No full textThe relationship between fertility and female labour force participation has been a subject of attention for several decades. Most of the literature focuses on developed countries and responds to the interest in understanding the evolution of the increasing female role in labour markets during the last century and the possible effect that controlled fertility may have on it. Fertility, however, is a choice variable and thus endogenous. Therefore, disentangling its impact is not straight forward and several approaches have been proposed over time in order to isolate it. One of those methods is the use of multiple births occurrence as an instrument for exogenous fertility which was introduced by Rosenzweig and Wolpin (1980) and also used by Bronars and Grogger (1994) and Jacobsen et al. (1999) in the context of developed countries and by Careces-Delpiano (2012) and Ponczek and Souza (2012) for developing countries
Accents, Race and Discrimination: Evidence from a Trust Game
No full textWe investigate discrimination according to accent and race on trust behaviour. Proposers were randomly paired with responders of the same/different race, and asked to play the trust game after looking at a photograph and hearing a 10 second audio clip of the responders reading a standardised script in English. This allows us to check for within and across-group favouritism in both race and accentedness. We find that accentedness is a statistically significant predictor of trust and is strongly non-linear in the race of the paired subjects for males but not for females. In the case of males, offers decrease by 11.3% if the responder has a mother-tongue English accent and does not share the same race as the proposer, but increases by about 6.6% if there is racial similarity. This effect is especially pronounced for Black males who are paired with other Black males: offers are 19.5% higher if responders have a mother-tongue English accent. By contrast, females in general seem less sensitive to the signal package. These large gender differences are not because men behave any more strategically than women.Yagman: Southern Africa Labour and Development Research Unit, University of Cape Town, Rondebosch 7700, Cape Town; Keswell: Southern Africa Labour and Development Research Unit & School of Economics, University of Cape Town, Rondebosch 7700, Cape Town. This paper is dedicated to the memory of Dr. Neville Alexander, who devoted his lifetime to advocate mother-tongue based multilingualism in South Africa. We are especially grateful to Justine Burns for helpful guidance and advice. We also thank seminar participants of the Research Unit in Behavioural and Neuroeconomics (Ruben) and the Southern Africa Labour and Development Research Unit (Saldru). Funding of this research is gratefully acknowledged from the National Research Foundation of South Africa
Duration of unemployment in youth transitions from schooling to work in Cape Town
No full textThe transition from school to work marks the beginning of the labour market experience of youth. If smooth and efficient, it can be a springboard to a successful career. However, it often is not a smooth transition and youth can be trapped in unemployment for relatively long periods. This paper makes use of a youth panel data set, the Cape Area Panel Survey (CAPS), which is rich in information about job search and timing of employment to illuminate the issue of youth transition to the labour market. Utilising month-by-month calendar entries, we are able to chart detailed labour market activity of youth in Cape Town. Following this, the nature and degree of duration dependence in the Cape Town labour market is examined using survival analysis. Furthermore, we examine whether the hazard of exiting the unemployment state is positive, negative or constant. Economic theory suggests that where the unemployment rate is very high, duration dependence should be negative, meaning that the likelihood of exiting a state of unemployment decreases with the length of the unemployment spell. The reasoning behind this postulation is that in an environment of high unemployment, the discouraged worker effect is prevalent, and it is likely that workers will decrease their search intensity or resort to a more passive means of job search. These factors could serve to decrease the exit probability of the unemployed.Cecil Mlatsheni: Senior Lecturer in the School of Economics, University of Cape Town,
[email protected]
Murray Leibbrandt: The DST/NRF Research Chair in Poverty and Inequality Research, the Director of
SALDRU and a Principal Investigator on the National Income Dynamics Study at the University of Cape Tow
Can Intra-Regional Trade Act as a Global Shock Absorber in Africa?
No full textThe global financial crisis and the subsequent uneven recovery have underscored the need for Africa’s resilience to output and other shocks originated in the rest of the world. A comparison of two regional economic communities – the East African Community (EAC) and the Southern Africa Customs Union (SACU) – suggests that deeper intra-regional, and in particular intra-industry, trade ties have contributed to the EAC’s resilience to external output shocks. More broadly, intra-regional and intra-African trade with fast-growing economies, together with geographically diversified trade links, can strengthen the capacity of African countries to absorb global output shocks. Besides helping shield countries from external shocks, intra-regional trade also supports economic diversification and participation in regional value chains.The authors thank Zorobabel Bicaba for contributions and Celine Allard, Daniel Gurara, Basil Jones, Albert Mafusire, and Andreas Wörgötter for comments that improved the paper. This paper is substantively modified from an earlier version, issued as AfDB Working Paper No. 198 and presented at the 2014 Congress of the International Economic Association and at the 2014 North American Meetings of the Econometric Society. Views expressed are those of the authors and do not necessarily reflect those of the African Development Bank. This was paper was also published as IZA Discussion Paper No. 920
Strategies of the unemployed in South Africa: Does moving allow the unemployed to get ahead?
No full textThis paper examines the survival strategies of the unemployed using the balanced panel of the first three waves of the National Income Dynamics Study. We find that in response to unemployment and almost no unemployment insurance, unemployed individuals look to parents, relatives and friends for economic support. They are more likely to attach themselves to household that have some income through an employed member or in receive of state support. In many cases the unemployed delay setting up their own households while others move back into family households when faced with persistent unemployment. We use a probit model to show that the unemployed who move are more likely to be employed in a successive wave. The effect of moving on employment status remains significant and positive when we take into account household and individual characteristics. Moving allows the unemployed to get ahead.Amina Ebrahim: PhD student in SALDRU, the School of Economics, University of Cape Town
Murray Leibbrandt: The DST/NRF Research Chair in Poverty and Inequality Research, the Director of SALDRU and a Principal Investigator on the National Income Dynamics Study.
Ingrid Woolard: Professor in the School of Economics, a Research Associate in SALDRU, a Principal Investigator on the National Income Dynamics Study.Amina Ebrahim acknowledges Master’s Scholarship funding from an NRF Grand Challenges Grant to SALDRU for work on South Africa’s Unfolding Human and Social Dynamics.
Murray Leibbrandt acknowledges the Research Chairs Initiative of the Department of Science and Technology and National Research Foundation for funding his work as the Research Chair in Poverty and Inequality