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Unemployment in South Africa: the nature of the beast

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Author Info
Geeta Kingdon (Centre for the Study of African Economies)
John Knight (Department of Economics,Oxford University)

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Abstract

Unemployment in South Africa is so widespread that it demands an explanation. This paper examines two questions about South African unemployment. Firstly, why do the unemployed not enter the informal sector, as is common in other developing countries? Secondly, why do the unemployed not enter wage employment more readily? The findings provide little support for the idea that unemployed people choose to be unemployed: the unemployed are substantially worse off, and less satisfied with their quality of life, than they would be if informally employed. Various impediments to entry into the informal sector increase open unemployment. The test of the hypothesis that the unemployed have unrealistically high wage aspirations suggests that the commonly reported high reservation wages (relative to predicted wages) are not to be interpreted as reflecting unwillingness to work.

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Paper provided by EconWPA in its series Labor and Demography with number 0409003.

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Length: 26 pages
Date of creation: 08 Sep 2004
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Handle: RePEc:wpa:wuwpla:0409003

Note: Type of Document - pdf; pages: 26
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J - Labor and Demographic Economics

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Manski, C.F., 1990. "The Selection Problem," Working papers 90-12, Wisconsin Madison - Social Systems.
  2. Kingdon, G. & Knight, J., 1999. "Unemployment and Wages in South Africa: A Spatial Approach," Working Papers Series 99-12, Centre for the Study of African Economies, University of Oxford.
  3. Osmani, S. R., 1990. "Wage determination in rural labour markets : The theory of implicit co-operation," Journal of Development Economics, Elsevier, vol. 34(1-2), pages 3-23, November. [Downloadable!] (restricted)
  4. H. Bhorat, 1999. "The October Household Survey, Unemployment and the Informal Sector: A Note," South African Journal of Economics, Economic Society of South Africa, vol. 67(2), pages 143-146, 06. [Downloadable!] (restricted)
  5. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July. [Downloadable!] (restricted)
    Other versions:
  6. Metcalf, David & Nickell, Stephen J & Floros, Nicos, 1982. "Still Searching for an Explanation of Unemployment in Interwar Britain," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 386-99, April. [Downloadable!] (restricted)
  7. Maluccio, John A. & Haddad, Lawrence James & May, Julian, 1999. "Social capital and income generation in South Africa, 1993-98," FCND discussion papers 71, International Food Policy Research Institute (IFPRI). [Downloadable!]
  8. P.A. Black & N. Rankin, 1998. "On the Cost - Increasing Effects of the New Labour Laws in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 66(4), pages 215-220, December. [Downloadable!] (restricted)
  9. Benjamin, Daniel K & Kochin, Levis A, 1979. "Searching for an Explanation of Unemployment in Interwar Britain," Journal of Political Economy, University of Chicago Press, vol. 87(3), pages 441-78, June. [Downloadable!] (restricted)
  10. Vella, Frank, 1988. "Generating conditional expectations from models with selectivity bias," Economics Letters, Elsevier, vol. 28(1), pages 97-103. [Downloadable!] (restricted)
  11. Di Tella, Rafael & MacCulloch, Robert J. & Oswald, Andrew J., 2001. "The Macroeconomics of Happiness," The Warwick Economics Research Paper Series (TWERPS) 615, University of Warwick, Department of Economics. [Downloadable!]
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  12. J. Gerson, 1981. "The Question of Structural Unemployment in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 49(1), pages 7-15, 03. [Downloadable!] (restricted)
  13. Kingdon, Geeta Gandhi & Knight, John, 2004. "Unemployment in South Africa: The Nature of the Beast," World Development, Elsevier, vol. 32(3), pages 391-408, March. [Downloadable!] (restricted)
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  14. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
  15. Schaffner, Julie Anderson, 1998. "Generating conditional expectations from models with selectivity bias: comment," Economics Letters, Elsevier, vol. 58(3), pages 255-261, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Dani Rodrik, 2006. "Understanding South Africa's Economic Puzzles," Working Papers id:641, esocialsciences.com. [Downloadable!]
    Other versions:
  2. Nattavudh Powdthavee, 2003. "Are there Regional Variations in the Psychological Cost of Unemployment in South Africa?," Labor and Demography 0310006, EconWPA, revised 28 Oct 2003. [Downloadable!]
  3. Pieter Serneels, 2004. "The Nature of Unemployment in Urban Ethiopia," Development and Comp Systems 0409042, EconWPA. [Downloadable!]
  4. Kalie Pauw & Morné Oosthuizen & Carlene van der Westhuizen, 2006. "Graduate Unemployment in the Face of Skills Shortages: A Labour Market Paradox," Working Papers 9604, University of Cape Town, Development Policy Research Unit. [Downloadable!]
    Other versions:
  5. Johannes G. Hoogeveen & Berk Özler, 2005. "Not Separate, Not Equal: Poverty and Inequality in Post-Apartheid South Africa," William Davidson Institute Working Papers Series wp739, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  6. Hassan Essop & Derek Yu, 2008. "The South African informal sector (1997 – 2006)," Working Papers 03/2008, Stellenbosch University, Department of Economics. [Downloadable!]
  7. Sophie Mitra, 2008. "The Recent Decline in the Employment of Persons with Disabilities in South Africa, 1998-2006," Fordham Economics Discussion Paper Series dp2008-12, Fordham University, Department of Economics. [Downloadable!]
    Other versions:
  8. Rodrick, Dani, 2006. "Understanding South Africa's Economic Puzzles," Working Paper Series rwp06-039, Harvard University, John F. Kennedy School of Government. [Downloadable!]
  9. Nattavudh Powdthavee, 2003. "Unhappiness and Crime: Evidence from South Africa," Development and Comp Systems 0310003, EconWPA, revised 17 Mar 2004. [Downloadable!]
    Other versions:
  10. Makino, Kumiko, 2008. "The Changing Nature of Employment and the Reform of Labor and Social Security Legislation in Post-Apartheid South Africa," IDE Discussion Papers 140, Institute of Developing Economies, Japan External Trade Organization(JETRO). [Downloadable!]
  11. Katy Cornwell, 2006. "Language and Labour in South Africa: A new approach for a new South Africa," Monash Econometrics and Business Statistics Working Papers 5/06, Monash University, Department of Econometrics and Business Statistics. [Downloadable!]
  12. Nattavudh Powdthavee, . "Jobless, Friendless, and Broke: What Happens to Different Areas of Life Before and After Unemployment?," Discussion Papers 09/15, Department of Economics, University of York. [Downloadable!]
  13. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2008. "Fair Wage Hypothesis, International Factor Mobility and Skilled-Unskilled Wage Inequality in a Developing Economy," MPRA Paper 9303, University Library of Munich, Germany. [Downloadable!]
  14. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2005. "Free Education Policy And Trade Liberalization: Consequences On Child And Adult Labour Markets In A Small Open Economy," Labor and Demography 0510018, EconWPA. [Downloadable!]
  15. Nattavudh Powdthavee, 2003. "Is the Structure of Happiness Equations the Same in Poor and Rich Countries? The Case of South Africa," Development and Comp Systems 0309003, EconWPA, revised 06 Nov 2003. [Downloadable!]
    Other versions:
  16. Sarbajit Chaudhuri & Shigemi Yabuuchi, 2005. "Economic Liberalization And Wage Inequality In The Presence Of Labour Market Imperfection," International Trade 0510008, EconWPA. [Downloadable!]
    Other versions:
  17. Geeta Kingdon & John Knight, 2004. "Unemployment in South Africa: the nature of the beast," Labor and Demography 0409003, EconWPA. [Downloadable!]
    Other versions:
  18. Katy Cornwell & Brett Inder, 2004. "Migration and Unemployment in South Africa: When Motivation Surpasses the Theory," Monash Econometrics and Business Statistics Working Papers 2/04, Monash University, Department of Econometrics and Business Statistics. [Downloadable!]
  19. Katy Cornwell, 2004. "Language and Labour in South Africa. A New Approach for a New South Africa," Econometric Society 2004 Australasian Meetings 254, Econometric Society. [Downloadable!]
  20. Justine Burns & Malcolm Keswell & Murray Leibbrandt, 2005. "Social assistance, gender, and the aged in South Africa," Feminist Economics, Taylor and Francis Journals, vol. 11(2), pages 103-115, July. [Downloadable!] (restricted)
  21. ESAU (Unassigned), 2005. "Public Works as a Solution to Unemployment in South Africa? Two Different Models of Public Works Programme Compared," Briefing Papers 2, Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute. [Downloadable!]
  22. Fatma El-Hamidi & Jackline Wahba, 2006. "Why Does the MENA Region Have Such High Unemployment Rates?," Working Papers 270, University of Pittsburgh, Department of Economics, revised Sep 2006.
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