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

Author

Listed:
  • Leung, Ron

    (African Development Bank)

  • Stampini, Marco

    (Inter-American Development Bank)

  • Vencatachellum, Désiré

    (African Development Bank)

Abstract

The financial and economic crisis of 2008 and 2009 has taken its toll on the South African economy. The economy contracted for the first time since 1998, and entered recession during the fourth quarter of 2008. The GDP contraction was soon transmitted to the labor market. Between the second quarters of 2008 and 2009, employment fell by 3.8 percent. However, not all individuals were hit with the same intensity. Using labor force survey data unique in the African context, we find that human capital provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital, and helps identifying the unskilled as those with the highest need for social safety net interventions during the recession.

Suggested Citation

  • Leung, Ron & Stampini, Marco & Vencatachellum, Désiré, 2009. "Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008-2009 Crisis," IZA Discussion Papers 4608, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp4608
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    References listed on IDEAS

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    Cited by:

    1. Kucera, David, & Roncolato, Leanne. & Uexküll, Erik von., 2010. "Trade contraction in the global crisis : employment and inequality effects in India and South Africa," ILO Working Papers 994594013402676, International Labour Organization.
    2. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    3. 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).
    4. Rahul Anand & Siddharth Kothari & Naresh Kumar, 2016. "South Africa: Labor Market Dynamics and Inequality," IMF Working Papers 2016/137, International Monetary Fund.
    5. Cho, Yoonyoung & Newhouse, David, 2013. "How Did the Great Recession Affect Different Types of Workers? Evidence from 17 Middle-Income Countries," World Development, Elsevier, vol. 41(C), pages 31-50.
    6. Rémi Bazillier & Jérôme Hericourt, 2017. "The Circular Relationship Between Inequality, Leverage, And Financial Crises," Journal of Economic Surveys, Wiley Blackwell, vol. 31(2), pages 463-496, April.
    7. Kucera, David & Roncolato, Leanne & von Uexkull, Erik, 2012. "Trade Contraction and Employment in India and South Africa during the Global Crisis," World Development, Elsevier, vol. 40(6), pages 1122-1134.
    8. repec:ilo:ilowps:459401 is not listed on IDEAS
    9. Dennis Essers, 2014. "South African Labour Market Transitions During the Global Financial and Economic Crisis: Micro-Level Evidence," WIDER Working Paper Series wp-2014-115, World Institute for Development Economic Research (UNU-WIDER).

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    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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