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Working Paper 106 - Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008 - 2009 Crisis

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The financial and economic crisis of 2008and 2009 has taken its toll on the SouthAfrican economy. The economy contractedfor the first time since 1998, and enteredrecession during the fourth quarter of 2008.The GDP contraction was soon transmittedto the labor market. Between the secondquarters of 2008 and 2009, employment fellby 3.8 percent. However, not all individualswere hit with the same intensity. Using laborforce survey data unique in the Africancontext, we find that human capital provideda buffer against the shock. After controllingfor observable characteristics, education andexperience showed the potential to entirelyoffset the effect of the recession on thelikelihood of employment. This has importantpolicy implications, as it strengthens thecase for strategic investments in humancapital, and helps identifying the unskilled asthose with the highest need for social safetynet interventions during the recession.

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  • Ron Leung & Marco Stampini & Désiré Vencatachellum, 2010. "Working Paper 106 - Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008 - 2009 Crisis," Working Paper Series 243, African Development Bank.
  • Handle: RePEc:adb:adbwps:243
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    1. Marianne Bertrand & Sendhil Mullainathan & Douglas Miller, 2003. "Public Policy and Extended Families: Evidence from Pensions in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 27-50, June.
    2. Sabine Bernab? & Marco Stampini, 2008. "Labour mobility during transition: evidence from Georgia," LICOS Discussion Papers 20608, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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