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Why has unemployment risen in the New South Africa?1

Author

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  • Abhijit Banerjee
  • Sebastian Galiani
  • Jim Levinsohn
  • Zoë McLaren
  • Ingrid Woolard

Abstract

We document the rise in unemployment in South Africa since the transition in 1994. We describe how changes in labour supply interacted with stagnant labour demand to produce unemployment rates that peaked between 2001 and 2003. Meanwhile, compositional changes in employment at the sectoral level widened the gap between the skill‐level of the employed and the unemployed. Using nationally representative panel data, we show that stable unemployment rates mask high individual‐level transition rates in labour market status. Our analysis highlights several key constraints to addressing unemployment in South Africa. We conclude that unemployment is near equilibrium levels and is unlikely to self‐correct without policy intervention.

Suggested Citation

  • Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October.
  • Handle: RePEc:bla:etrans:v:16:y:2008:i:4:p:715-740
    DOI: 10.1111/j.1468-0351.2008.00340.x
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    References listed on IDEAS

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    JEL classification:

    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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