CSSR/SALDRU Working Papers

While the political transition to democratic rule in South Africa was smooth and rapid, the economic transition has been slow and difficult.  Nowhere is this more apparent than in the labour market.  Job creation has not matched the growing labour supply and the unemployment rate continues to rise. This paper attempts to document and identify the key trends in labour force participation, unemployment and employment so as to better understand the factors that drive the performance of the labour market.

We analyse models in which additional "controls" or proxies are included in a regression. This might occur intentionally if there is significant measurement error in a key regressor or if a key variable is not measured at all. We develop a test of the hypothesis that a subset of the regressors are all proxying for the same latent variable and we show how an estimate of the structural coefficient might be obtained more efficiently than is available in the current literature. We apply the procedure to the determinants of sleep among young South Africans. We show that the income variable in the time use survey is badly measured. Nevertheless the measured impact of income on sleep is significant and amounts to 35 minutes per day between children with the median income and those in the topmost income bracket. Including a variety of asset proxies increases the estimated size of the coefficient enormously. The specification tests indicate that some of the asset proxies, however, have independent effects. Access to electricity, in particular, is not simply proxying for income. Instead it seems to be capturing access to various forms of entertainment, such as television. Even when this independent effect is properly accounted for, the size of the income coefficient is still 40% to 100% larger than in the specifications without the proxies.

Financial instruments of the poor: Initial findings from the financial diaries study

While in many African countries, open unemployment is largely confined to urban areas and thus overall rates are quite low, in South Africa (and a few other Southern African countries), open unemployment rates hover around 30%, with rural unemployment rates being even higher than that.  This occurs despite the near complete absence of an unemployment insurance system and little labour market regulation that applies to rural labour markets.  This paper examines how unemployment can persist without support from unemployment compensation.  Analysing household surveys from 1993, 1995, and 1998, we find that the household formation response of the unemployed is the critical way in which the unemployed assure access to resources.  In particular, unemployment delays the setting up of an individual household by young persons, in some cases by decades.  It also leads to the dissolution of existing households and a return of constituent members to parents and other relatives and friends.  Access to state transfers (in particular, non-contributory old age pensions) increases the likelihood of attracting unemployed persons to a household.  Some unemployed do not benefit from this safety net, and the presence of unemployed members pulls many households supporting them into poverty.  We also show that the household formation response draw some of the unemployed away from employment opportunities, and thus lowers their employment prospects.

It is important to stress that this paper's aim is not to argue substantively against a basic income grant policy. Rather, it proposes that the necessary homework has to be identified first; then appropriate research conducted as the second step; before, thirdly, any policy advocacy is justified. This paper aims at the first task, to raise the questions judged still outstanding.

This paper analyses labour market behaviour of the elderly in South Africa, focusing on the Black/African population group. The analysis uses data from the 2001 census and 1996 census, the Labour Force Surveys for September 2000 and 2001, and the Income and Expenditure Survey for 2000. Findings show that participation rates fall fairly rapidly after age 45, with particularly sharp declines in both participation and work at the age of eligibility for the old-age pension. Measures of unused productive capacity demonstrate that South Africa's age profile of labour force withdrawal compares favourably with some OECD countries. The hazard rate indicates that the age of pension eligibility is associated with increased rates of retirement. The paper also examines major determinants of elderly labour supply, including household structure and marital status, public and private pensions and schooling and, finally, calculates probit regressions to gain a clearer picture of the variables affecting the work activity of the elderly.

We examine patterns of health seeking behaviour prior to death among 1282 individuals who lived in the Umkhanyakude District of Northern KwaZulu-Natal. Information on the health care choices of these individuals, who died between January 2003 and July 2004, was gathered after their deaths from their primary care-givers. We examine choices made concerning public and private medicine, western and traditional medicine, and non-prescribed self-medication. We find that virtually all adults who were ill prior to death sought treatment from a Western medical provider, visiting either a public clinic or a private doctor. In this district, which is predominantly poor, ninety percent of adults who sought treatment from a public clinic also visited a private doctor. Fifty percent also sought treatment from a traditional healer, suggesting that traditional medicine is seen as a complement to, rather than a substitute for, Western care. Better educated people who were ill for less than a month before dying were significantly more likely to visit a private doctor, while those least well educated were more likely to visit a traditional healer. Controlling for length of illness, better educated and wealthier people sought care from a greater range of providers, and spent significantly more on their treatment.

Infrastructure provisions, especially rural roads, have been highlighted in a number of recent studies and reports as an enabling factor for Africa to achieve 'development'. This paper reviews the current limits of rural road knowledge and appraisal procedures raising critical issues about what is actually known about the impact of rural roads and the extent to which current appraisal methods are able to fully contribute to this debate. An expanded methodology incorporating the capability approach is advocated to help overcome these issues. It is argued here that incorporation of the capability approach may help overcome certain frustrations in our ability to understand the manner in which rural roads impact upon the lives of people. The suggestion is made that the capability approach offers a different angle of analysis that could further contribute to critical questions surrounding the provision of roads, enhancing appraisal and helping to avoid the creation of further infrastructural 'white elephants' that have plagued Africa. Provision of rural roads is after all quite expensive and without a valid appraisal mechanism, money spent on some rural roads may more constructively be utilised elsewhere either on other roads, or on other sectors.