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Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal

Author

Listed:
  • Paul Cichello
  • Gary Fields
  • Murray Leibbrandt

    (University of Cape Town)

Abstract

The labour market is central in determining individual and household well-being in South Africa. Therefore, an understanding of earnings and employment dynamics is a key policy issue. However, the absence of panel data has constrained empirical work addressing these topics. This paper conducts such a study using a regional panel data set, the KwaZulu-Natal Income Dynamics Study (KIDS). The authors find that, on average, working aged Africans in KwaZulu-Natal experienced large gains in earnings during the 1993 to 1998 period. These gains were progressive in nature, with the highest quintile of 1993 earners and those originally employed in the formal sector actually experiencing zero or negative growth in their average earnings. The average gain in earnings varied substantially depending on the employment transitions that labour force participants experienced. Obtaining formal sector employment is found to be an important pathway to growth in earnings, yet the vast majority of those who get ahead do so by retaining employment in a given sector or moving to the informal sector. The dynamism of the informal sector over this period is shown to be an important contributor to the progressive growth in earnings. Government policies that seek to increase employment and earnings in the informal as well as formal sectors are recommended. Understanding the constraints preventing the vast number of unemployed from engaging in informal employment is shown to be a key issue for future work.

Suggested Citation

  • Paul Cichello & Gary Fields & Murray Leibbrandt, 2003. "Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal," Working Papers 03077, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:03077
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    File URL: http://hdl.handle.net/11427/7388
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    References listed on IDEAS

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    Cited by:

    1. Essers, Dennis, 2013. "South African labour market transitions during the global financial and economic crisis: Micro-level evidence from the NIDS panel and matched QLFS cross-sections," IOB Working Papers 2013.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    2. Olivier Bargain & Prudence Kwenda, 2014. "The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data," Economic Development and Cultural Change, University of Chicago Press, vol. 63(1), pages 117-153.
    3. Andrew Kerr & Martin Wittenberg & Jairo Arrow, 2014. "Job Creation and Destruction in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 82(1), pages 1-18, March.
    4. Stefan Dercon & Joseph S. Shapiro, 2007. "Moving On, Staying Behind, Getting Lost: Lessons on poverty mobility from longitudinal data," Economics Series Working Papers GPRG-WPS-075, University of Oxford, Department of Economics.
    5. Haroon Bhorat & Ravi Kanbur, 2005. "Poverty and Well-being in Post-Apartheid South Africa: An Overview of Data, Outcomes and Policy," Working Papers 05101, University of Cape Town, Development Policy Research Unit.
    6. Finn, Arden & Leibbrandt, Murray, 2013. "Mobility and Inequality in the First Three Waves of NIDS," SALDRU Working Papers 120, Southern Africa Labour and Development Research Unit, University of Cape Town.
    7. Paul Cichello & Hala Abou-Ali & Daniela Marotta, 2013. "What happened to real earnings in Egypt, 2008 to 2009?," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-38, December.
    8. Essers, Dennis, 2013. "South African labour market transitions during the global financial and economic crisis: Micro-level evidence from the NIDS panel and matched QLFS cross-sections," IOB Working Papers 2013.12, Universiteit Antwerpen, Institute of Development Policy (IOB).
    9. repec:ldr:wpaper:92 is not listed on IDEAS
    10. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 809-842, December.
    11. Mich Brookes & Timothy Hinks, 2004. "The Racial Employment Gap In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(3), pages 573-580, September.
    12. Rosa Dias & Dorrit Posel, 2007. "Unemployment, Education and Skills Constraints in Post-Apartheid South Africa," Working Papers 07120, University of Cape Town, Development Policy Research Unit.
    13. Claire Vermaak, 2012. "Tracking poverty with coarse data: evidence from South Africa," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 10(2), pages 239-265, June.
    14. Olivier Bargain & Prudence Kwenda, 2010. "Is Informality Bad? - Evidence from Brazil, Mexico and South Africa," Working Papers 201003, School of Economics, University College Dublin.
    15. Alex Sienaert, 2008. "Some Child Cost Estimates for South Africa," Economics Series Working Papers WPS/2008-15, University of Oxford, Department of Economics.
    16. Ija Trapeznikova & Juan Pablo Rud, 2015. "Wage Dispersion, Job Creation and Development: Evidence from Sub-Saharan Africa," 2015 Meeting Papers 1005, Society for Economic Dynamics.
    17. Olivier Bargain & Prudence Kwenda, 2009. "The Informal Sector Wage Gap: New Evidence Using Quantile Regressions on Panel Data," CEDI Discussion Paper Series 09-06, Centre for Economic Development and Institutions(CEDI), Brunel University.
    18. Alex Sienaert, 2008. "Some Child Cost Estimates for South Africa," CSAE Working Paper Series 2008-15, Centre for the Study of African Economies, University of Oxford.

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    More about this item

    Keywords

    South Africa: labour market; household well-being; earnings and employment dynamics;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

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