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Creative destruction or simple reshuffling? Turnover among businesses and jobs in South Africa

Author

Listed:
  • Justin Visagie

    (Chief Research Specialist, Human Sciences Research Council; Assoc Prof, Dept of Economics and Finance, University of the Free State)

  • Ivan Turok

    (Distinguished Research Fellow, Human Sciences Research Council; Professor, Dept of Economics and Finance, University of the Free State)

  • Andrew Nell

    (Freelance Consultant to HSRC; Data Analyst, Independent)

Abstract

The concept of creative destruction emphasizes how the turnover of businesses and workers drives innovation, productivity gains and aggregate economic growth, even as individual firms and employees experience disruption. This article leverages administrative tax data for South Africa that measures flows rather than stocks, enabling a dynamic analysis of labour and firm adjustments. Our findings reveal unexpectedly high levels of churn in both jobs and business establishments, suggesting fluid rather than rigid markets. However, job and business creation mirror destruction, resulting in low net growth. Moreover, sectoral shifts over time have not increased the share of tradables, implying that structural transformation has stalled.

Suggested Citation

  • Justin Visagie & Ivan Turok & Andrew Nell, 2025. "Creative destruction or simple reshuffling? Turnover among businesses and jobs in South Africa," ERSA Working Paper Series 166, Economic Research Southern Africa.
    • Handle: RePEc:rza:ersawp:166
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    File URL: https://ersawps.org/index.php/working-paper-series/article/view/166/146
    File Function: First version, 2025
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    Keywords

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    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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