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

  • Paul Cichello
  • Gary Fields
  • Murray Leibbrandt

    ()

    (University of Cape Town)

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.

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Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 03077.

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Length: 37 pages
Date of creation: May 2003
Date of revision:
Publication status: Published in Working Paper Series by the Development Policy Research Unit, May 2003, pages 1-37
Handle: RePEc:ctw:wpaper:03077
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  1. Stephan Klasen & Ingrid Woolard, 2009. "Surviving Unemployment Without State Support: Unemployment and Household Formation in South Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(1), pages 1-51, January.
  2. Haroon Bhorat, 2000. "Wage premia and wage differentials in the South African labour market," Working Papers 00043, University of Cape Town, Development Policy Research Unit.
  3. Geeta Kingdon & John Knight, 2000. "Are Searching and Non-searching Unemployment Distinct States when Unemployment is High? The Case of South Africa," Economics Series Working Papers WPS/2000-02, University of Oxford, Department of Economics.
  4. T. Paul Schultz & Germano Mwabu, 1998. "Labor unions and the distribution of wages and employment in South Africa," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
  5. Moll, Peter G., 1993. "Industry wage differentials and efficiency wages : A dissenting view with South African evidence," Journal of Development Economics, Elsevier, vol. 41(2), pages 213-246, August.
  6. Haroon Bhorat, 2000. "The impact of trade and structural changes on sectoral employment in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 17(3), pages 437-466.
  7. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September.
  8. Fields, Gary S. & Cichello, Paul & Freije, Samuel & Menéndez, Marta & Newhouse, David, 2003. "Household income dynamics : a four-country story," Economics Papers from University Paris Dauphine 123456789/1562, Paris Dauphine University.
  9. Julian F. Hofmeyr & Robert E. B. Lucas, 1998. "The Rise in Union Wage Premia in South Africa," Boston University - Institute for Economic Development 83, Boston University, Institute for Economic Development.
  10. H. Bhorat & J. Hodge, 1999. "Decomposing Shifts in Labour Demand in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 67(3), pages 155-168, 09.
  11. M Leibbrandt & H Bhorat & I Woolard, 2001. "Household Inequality And The Labor Market In South Africa," Contemporary Economic Policy, Western Economic Association International, vol. 19(1), pages 73-86, 01.
  12. Fields, Gary S & Yoo, Gyeongjoon, 2000. "Falling Labor Income Inequality in Korea's Economic Growth: Patterns and Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-59, June.
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