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Earnings volatility in South Africa

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  • Ranchhod, Vimal

    (SALDRU, School of Economics, University of Cape Town)

Abstract

How much volatility is there in earnings in South Africa? The South African labour market has been shown to be a key determinant of welfare, both in terms of poverty and inequality. These are a function of both the high levels of unemployment as well as the wage distribution, conditional on being employed. One aspect of welfare that derives from the labour market, which has been relatively understudied to date, is the amount of volatility in earnings that various groups of South Africans experience over time. This has implications directly for welfare, as well as for inequality. We make use of the first three waves of data from the National Income Dynamics Study to describe the amount of earnings volatility experienced by different demographic groups. We then make use of a regression model to estimate the partial correlation between the various characteristics that we use and earnings volatility. Our main findings are that earnings volatility is high over a four year interval. The mean within-person standard deviation in earnings across the three waves lies between 50% and 66% of the mean earnings depending on the time period, and the mean within-person coefficient of variation in earnings is 0.641.

Suggested Citation

  • Ranchhod, Vimal, 2013. "Earnings volatility in South Africa," SALDRU Working Papers 121, Southern Africa Labour and Development Research Unit, University of Cape Town.
    • Handle: RePEc:ldr:wpaper:121
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    References listed on IDEAS

    as
    1. Shin, Donggyun & Solon, Gary, 2011. "Trends in men's earnings volatility: What does the Panel Study of Income Dynamics show?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 973-982, August.
    2. M Leibbrandt & I Woolard & H Bhorat, 2000. "Understanding Contemporary Household Inequality in South Africa," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 24(3), pages 31-51, November.
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    Cited by:

    1. 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.
    2. Ivan Turok & Josh Budlender & Justin Visagie, 2017. "The Role of Informal Urban Settlements in Upward Mobility," Working Papers 201701, University of Cape Town, Development Policy Research Unit.
    3. Andrew Kerr & Martin Wittenberg, 2019. "Earnings and employment microdata in South Africa," WIDER Working Paper Series wp-2019-47, World Institute for Development Economic Research (UNU-WIDER).
    4. Mohimont, Jolan, 2022. "Welfare effects of business cycles and monetary policies in a small open emerging economy," Journal of Economic Dynamics and Control, Elsevier, vol. 136(C).
    5. Rocco Zizzamia & Simone Schotte & Murray Leibbrandt, 2019. "Snakes and ladders and loaded dice: Poverty dynamics and inequality in South Africa, 2008-2017," WIDER Working Paper Series wp-2019-25, World Institute for Development Economic Research (UNU-WIDER).

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