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The economy-wide impacts of the labour intensification of infrastructure expenditure in South Africa

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  • Anna McCord
  • Dirk Ernst van Seventer

Abstract

This paper examines the performance of public works in addressing both micro and macroeconomic policy objectives relating to growth, employment and poverty reduction in South Africa. The microeconomic analysis suggests that while participation in a public works programme may contribute to a reduction in the depth of poverty, with improvements in participation in education and nutrition, and have positive psychosocial benefits, the impact of a short-term programme may not be significant in terms of a reduction in headcount poverty or improvements in asset ownership (material or financial). In this case the public works programme income may function essentially as a temporary wage shock, since the insurance function of the transfer is limited by the short duration of the employment period. From a macroeconomic perspective, a social accounting matrix (SAM) is used to estimate the impact of shifting R3 billion expenditure from machine to labour based infrastructure provision over a one year period. The SAM indicates that the impact would be to increase employment by 1%, the income of the poorest quintile by 2% (if employment were exclusively targeted to this group) and GDP by 0.1%. While these are positive outcomes, they are not significant in terms of South Africa's overall economic and employment performance. The conclusion is drawn that from both a macro and microeconomic perspective, there is reason to be cautious about the potential of a national public works programme based on shifting the labour intensity of infrastructure provision, and offering short-term employment opportunities, to have a significant impact on poverty, employment or growth.

Suggested Citation

  • Anna McCord & Dirk Ernst van Seventer, 2004. "The economy-wide impacts of the labour intensification of infrastructure expenditure in South Africa," SALDRU/CSSR Working Papers 093, Southern Africa Labour and Development Research Unit, University of Cape Town.
  • Handle: RePEc:ldr:cssrwp:093
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    References listed on IDEAS

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    1. César Calderón & Alberto Chong, 2004. "Volume and Quality of Infrastructure and the Distribution of Income: An Empirical Investigation," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 87-106, March.
    2. Thurlow, James & van Seventer, Dirk Ernst, 2002. "A standard computable general equilibrium model for South Africa," TMD discussion papers 100, International Food Policy Research Institute (IFPRI).
    3. Anna McCord, 2004. "Policy Expectations and Programme Reality: The Poverty Reduction and Labour Market Impact of Two Public Works Programmes in South Africa," Working Papers 8, Economics and Statistics Analysis Unit (ESAU), Overseas Development Institute.
    4. Ingrid Woolard & Murray Leibbrandt, 1999. "Household Incomes, Poverty and Inequality in a Multivariate Framework," Working Papers 99031, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Antonio Estache, 2010. "A survey of impact evaluations of infrastructure projects, programs and policies," Working Papers ECARES 2010_005, ULB -- Universite Libre de Bruxelles.
    2. Rosas Raffo,Nina & Sabarwal,Shwetlena, 2016. "Can you work it ? evidence on the productive potential of public works from a youth employment program in Sierra Leone," Policy Research Working Paper Series 7580, The World Bank.
    3. Antonio Estache & Elena Ianchovichina & Robert Bacon & Ilhem Salamon, 2013. "Infrastructure and Employment Creation in the Middle East and North Africa," World Bank Publications, The World Bank, number 12237, October.
    4. Rania Antonopoulos, 2007. "The Right to a Job, the Right Types of Projects: Employment Guarantee Policies from a Gender Perspective," Economics Working Paper Archive wp_516, Levy Economics Institute.
    5. Lieuw-Kie-Song, Maikel. & Philip, Kate. & Tsukamoto, Mito. & Van Imschoot, Marc., 2011. "Towards the right to work : innovations in public employment programmes (IPEP)," ILO Working Papers 994607683402676, International Labour Organization.
    6. repec:ilo:ilowps:460768 is not listed on IDEAS

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