South Africa: Labor Market Dynamics and Inequality

By Rahul Anand, Siddharth Kothari, Naresh Kumar

July 11, 2016

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Rahul Anand, Siddharth Kothari, and Naresh Kumar. South Africa: Labor Market Dynamics and Inequality, (USA: International Monetary Fund, 2016) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper analyzes the determinants of high unemployment in South Africa by studying labor market dynamics using individual level panel data from the Quarterly Labor Force Survey. While prior work experience and gender are found to be important determinants of the job-finding rate, education attainment and race are important determinants of the job-exit rate. Using stock-flow equations, counterfactual exercises are conducted to quantify the role of these different transition rates on unemployment. The paper also explores the contribution of unemployment towards inequality. Reducing unemployment is found to be important for reducing inequality – estimates suggest that a 10 percentage point reduction in unemployment lowers the Gini coefficient by 3 percent. Achieving a similar reduction solely through transfers would require a 40 percent increase in government transfers.

Subject: Employment, Labor, Labor markets, Labor unions, Unemployment, Unemployment rate

Keywords: Africa, Employment, Employment prospects, Inequality, Job growth, Job-exit rate, Job-finding rate, Labor market transitions, Labor markets, Labor unions, Rate regression, South Africa, Transition rate, Unemployment, Unemployment rate, Uunemployment, Work experience, WP

Publication Details

Pages:

37
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/137
Stock No:

WPIEA2016137
ISBN:

9781498358934
ISSN:

1018-5941

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