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South Africa: Labor Market Dynamics and Inequality
Author:
Rahul Anand
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Siddharth Kothari
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Naresh Kumar
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 137
Language:
English
Publication Date:
11 Jul 2016
DOI:
https://doi.org/10.5089/9781498358934.001
ISBN:
9781498358934
ISSN:
1018-5941
Pages:
37
Keywords:
WP; work experience; Uunemployment; South Africa; Labor market transitions; Inequality; job-exit rate; job-finding rate; rate regression; employment prospects; job growth; transition rate; Unemployment; Unemployment rate; Employment; Labor unions; Labor markets; Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2016: Issue 137