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Income mobility in South Africa: Evidence from the first two waves of the National Income Dynamics Study
No full textAs is clear from the title of the National Income Dynamics Study (NIDS), one of the major reasons for undertaking South Africa's first national panel study has been to gain an understanding of income mobility. In 2008, a nationally sampled set of South African residents were visited for the first time in wave 1 of NIDS. During this visit, the baseline information was gathered to track and understand changes in their well-being going forward. This sample was nationally representative in order for NIDS to provide an assessment of these changes at the aggregate level. Also, it was large enough to enable NIDS to provide information on key sub-sets of this national story. We need to know who is making progress in terms of escaping poverty, or at least increasing their real income and what factors are driving this. Also, we need to know who is persistently poor and why.NIDS Dat
Self-assessed well-being: Analysis of the NIDS Wave 1 and 2 Datasets
No full textMost nationally representative household surveys in South Africa collect data on money-metric measures of well-being (income and expenditure), which are then used to generate statistics on poverty and inequality. However, these measures may be limited in several ways. First, they typically are not able to identify differences in economic well-being within the household when all resources in the household are not equally shared. Second, income received or spent captures only one aspect of economic status specifically and of well-being more generally, and a wide range of other factors will also affect an individual's quality of lifeNids Dat
Wealth in the National Income Dynamics Study Wave 2
No full textThis document investigates the composition and distribution of individual and household wealth in the National Income Dynamics Study (NIDS) Wave 2 dataset (SALDRU, 2010-2011). The NIDS Wave 2 instrument marks the first time in South Africa that a nationally representative household survey obtained sufficient information to calculate individual and household net worth. As such, it represents a very important contribution to the stock of knowledge on these concepts, and the dataset itself also contains rich information on concepts related to wealth, such as income, expenditure, savings and debt.NIDS dat
Government spending, corruption and economic growth
No full textThis paper considers the effects of corruption and government spending on economic growth. It starts from an endogenous growth model and extends it to account for the detrimental effects of corruption on the potentially productive components of government spending, namely military and investment spending. The resulting model is estimated on a sample of African countries and the results show, first, that the growth rate is strongly influenced by the interaction between corruption and military burden, with the interaction between corruption and government investment expenditure having a weaker effect. Second, allowing for the cyclical economic fluctuations in specific countries leaves the estimated elasticities close to those of the full sample. Third, there are significant conditioning variables that need to be taken into account, namely the form of government, political instability and natural resource endowment. These illustrate the cross country heterogeneity when accounting for quantitative direct and indirect effects of key variables on economic growth. Overall, these findings suggest important policy implications. Classification-JEL: O57, H5, D73corruption; military spending; development economics; panel data; Afric
Two sides of the same coin: Re-examining nepotism and discrimination in a segmented society
No full textWe report the results from a series of trust games designed to distinguish racial discrimination from racial nepotism, played with a sample of high school students in Cape Town, South Africa. In contrast to the original work in this regard by Fershtman et al. (2005), we find considerably greater heterogeneity in the way that proposers respond to the revealed racial identity of their partner, with nepotism being a dominant behavior. However, while some proposers exhibit a nepotistic bias in their offers that favors in-group members on average, others exhibit a nepotistic strategy that favors out-group members. A consequence of this nepotism is that both efficiency and equity are reduced on average
Child Grants: Analysis of the NIDS Wave 1 and 2 Datasets
No full textThis paper provides a brief summary of some key descriptive findings about child grants from the first two waves of the National Income Dynamics Study (NIDS). Wave 1 was conducted in 2008 and Wave 2 in 2010/11. The paper has two main purposes – to assess the quality of the NIDS data on child grants and to stimulate discussion of these initial findings with the aim of encouraging more detailed analytical work using the NIDS data
Electoral Rules and Clientelistic Parties: A Regression Discontinuity Approach
No full textThis paper studies the causal effect of electoral systems on the performance of clientelistic vs. programmatic parties. We argue that, contrary to majoritarian systems, proportional systems disfavor clientelistic parties as voters can hardly be pivotal for electing their local patron. We test this insight using data from local elections in Morocco from 2003 and 2009. We use a regression discontinuity approach exploiting the fact that the law stipulates a population threshold below which the system is majoritarian and above which it is proportional. Results show a differential causal effect of proportional systems on programmatic and clientelisticparties: Clientelistic parties halve their seats and the programmatic party doubles them when crossing the threshold of proportionality. An important caveat is that the sample size around the threshold being relatively small, some coefficients are estimated relatively imprecisely. Fixed effects estimates exploiting a change in threshold from 2003 to 2009 yield qualitatively similar results. Length: 52 page
Univariate Multiple Imputation for Coarse Employee Income Data
No full textThis paper is concerned with conducting univariate multiple imputation for employee income data that is comprised of continuously distributed observations, observations that are bounded by consecutive income brackets, and observations that are missing. A variable with this mixture of data types is a form of coarsening in the data. An interval-censored regression imputation procedure is utilised to generate plausible draws for the bounded and nonresponse subsets of income. We test the sensitivity of results to mis-specification in the prediction equations of the imputation algorithm, and we test the stability of the results as the number of imputations increase from two to five to twenty. We find that for missing data, imputed draws are very different for respondents who state that they don't know their income compared to those who refuse. The upper tail of the income distribution is most sensitive to mis-specification in the imputation algorithm, and we discuss how best to conduct multiple imputation to take this into account. Lastly, stability in parameter estimates of the income distribution is achieved with as little as two multiple imputations, due largely to (a) the small fraction of missing data, in combination with (b) reduced within- and between-imputation components of variance for imputed draws of the bracketed income subset, a function of the defined lower and upper bounds of the brackets that restrict the range of plausibility for imputed draws. This is a joint SALDRU and DataFirst working paperMultiple Imputation, Coarse Data, Income Distribution Classification-JEL: C15, C83, D3
A Framework for Investigating Micro Data Quality, with Application to South African Labour Market Household Surveys
No full textIn this paper the Total Survey Error (TSE) paradigm is combined with detailed data quality indicators to develop a framework for investigating micro data quality. The TSE framework is widely used in the survey methodology literature to identify different components of error that arise in the survey process. Consequently, it provides a very useful typology for researchers to understand which data quality issues are relevant in applied work based on these surveys. In order to demonstrate how the framework sheds light on micro data quality, two labour market household surveys conducted by Statistics South Africa are reviewed, spanning a time-frame from 1995-2007. It is argued that efforts to improve data quality should involve a virtuous interaction between producers and consumers of micro data and should be considered an evolving process. For producers of data, the preparation and publication of detailed data quality frameworks is recommended, and two examples of these frameworks are reviewed. For consumers of data, judicious analyses of the univariate, bivariate and multivariate relationships in public-use versions of the datasets can help shed light on different components of survey error, and should be communicated back to survey organisations. Ultimately, improving data quality is about being more explicit about the limitations of data production at each stage of the process, which does not stop at initial public release.
This is a joint SALDRU and DataFirst working paper
Evidence on the impact of minimum wage laws in an informal sector: Domestic workers in South Africa
No full textWhat happens when a previously uncovered labor market is regulated? We exploit the introduction of a minimum wage in South Africa and variation in the intensity of this law to identify increases in wages for domestic workers and no statistically significant effects on employment on the intensive or extensive margins. These large, partial responses to the law are somewhat surprising, given the lack of monitoring and enforcement in this informal sector. We interpret these changes as evidence that strong external sanctions are not necessary for new labor legislation to have a significant impact on informal sectors of developing countries, at least in the short-run