Working Paper: NBER ID: w13167
Authors: Abhijit Banerjee; Sebastian Galiani; Jim Levinsohn; Zo McLaren; Ingrid Woolard
Abstract: We document the rise in unemployment in South Africa since the transition in 1994. We describe the likely causes of this increase and analyze whether the increase in unemployment is due to structural changes in the economy (resulting in a new equilibrium unemployment rate) or to negative shocks (that temporarily have increased unemployment). We conclude the former are more important. Our analysis includes a multinomial logit approach to understanding transitions in individual-level changes in labor market status using the first nationally representative panel in South Africa. Our analysis highlights several key constraints to addressing unemployment in South Africa.
Keywords: unemployment; South Africa; labor market; structural changes; economic shocks
JEL Codes: J18
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increase in unemployment (J64) | structural changes in the economy (L16) |
| structural changes in the economy (L16) | rising unemployment rates (J64) |
| supply of labor increased (J20) | rising unemployment rates (J64) |
| decline in demand for labor (J20) | rising unemployment rates (J64) |
| institutional factors (D02) | persistence of high unemployment rates (J64) |
| union wage differentials (J31) | persistence of high unemployment rates (J64) |
| increase in equilibrium rate of unemployment (J64) | necessity for active policy interventions (J68) |