A key output for each of the REDI3x3 funded projects is the production of a publishable working paper. The papers below are those published by the project, since its inception in the later half of 2012.
A total of 78 papers were commissioned. These will be added to the list below, as they are completed.
In the context of high and persistent unemployment in South Africa, this paper explores the extent to which the country’s biodiversity assets, which are exceptional in global terms, contribute to providing jobs. A conceptual framework for defining biodiversity-related employment is presented. Using a methodology that draws on a combination of three different data sources (administrative data, national survey data, and existing estimates for particular biodiversity-related sectors), an initial estimate is developed of 390 000 biodiversity-related jobs in 2014, representing 2.5% of national employment. Of these, 18% (70 000) are jobs directly involved in conserving biodiversity, and 82% (318 000) are jobs that depend directly on using biodiversity, including both non-consumptive and extractive use. The results suggest strong potential for biodiversity assets to support long-term inclusive growth and employment outside major urban centres, with further work needed to quantify this potential and to determine how best it can be enabled.
South African inequality, both in overall income and in labour earnings, has increased on many measures, even accounting for changes in the characteristics of the population. This raises the question as to what has led to these changes. One of the explanations for the rise in inequality in developed economies is the collapse in union power. South African unions, by contrast, are still influential and have even been accused of increasing inequality by raising the wages of insiders at the expense of the non-unionised. We locate the analysis of the union wage premium in South Africa in the context of measurement and data quality issues, estimation methods, the evolution of unionism and the intersection between unionism and other institutions. We briefly review studies on union density and the union premium in the other BRICS economies (Brazil, Russia, India and China) also, and compare our results for South Africa to the results from these countries obtained in the literature.
In South Africa, school quality is heterogeneous and highly stratified along race, socioeconomic status and geographic location. Because of the lingering effect of apartheid, public schools which historically served the white minority and received a much higher endowment of inputs are still out-performing public schools which historically served the black population. In this paper, I use longitudinal data containing test scores and background information on children in grades 3, 4 and 5 in order to estimate the effect of attending a historically white school on the test scores of black children. The models are estimated using a value-added approach in order to control for unobserved child-specific heterogeneity in the form of individual ability. I find a slightly larger effect associated with attending a former white school in South Africa than has previously been estimated for private schools in India and Pakistan and assess the validity of the estimates using various robustness checks.
Despite significant expansions in educational attainment over the two decades following democracy–particularly amongst the workforce–wage and income inequality in South Africa ranks amongst the highest in the world. The ‘paradox of progress’, as coined by Bourguignon, Ferreira and Lustig (2005), predicts that under convex returns to education, equalising educational expansion can worsen of wage inequality. This paper aims to provide evidence in support of this paradox in the South African context. We employ comparative-static microeconometric decompositions that isolate the direct ‘effect’ of observed educational expansion, as well as simulated scenarios, on wage inequality. We find that, over the period 1994 to 2011, educational expansion in South Africa was disequalising and closely linked to the convexity of returns to education. We propose that the convexity in the returns to education is related to technological change that is biased towards high skill jobs. Specifically, shifts in cohort-specific supplies of highly educated labour, combined with a higher relative demand for educated workers, may provide one explanation why wage and income inequality in South Africa is likely to remain stubborn. Therefore, tempering convexity in the returns to education and improving the distribution of income partly requires tackling the problem of dysfunctional and ineffective schooling in order to provide individuals with skills that are compatible with job creation.
A number of empirical studies have found convex schooling-earnings profile is in various countries, especially in the developing world. This is usually interpreted as evidence of a very high demand for highly skilled workers, but can also reflect heterogeneous marginal returns to schooling that are positively correlated to number of years of completed schooling. This paper attempts to distinguish between convexity in the earnings profile and heterogeneity in the schooling returns by investigating a country with notoriously high inequality in the quality of schools and family background: South Africa. We use a natural experiment in education policy to estimate the non-linear earnings profile while allowing for endogenous schooling and heterogeneous returns. The results of our control function estimates suggest that, unlike what was found by a number of OLS studies, the South African schooling earnings profile is actually very close to linear and perhaps even concave. We also find evidence of substantial heterogeneity in the curvature of this profile, which may reflect the high levels of inequality in school quality and family background. The results suggest that individuals with low returns end up with fewer schooling years, while high-return individuals choose to complete more years of schooling..
The paper offers an empirical analysis of the relative contribution of labour market experience and firm tenure on individual worker wage growth for South African black and white workers. Our base specification finds that an additional year of firm tenure contributes more to average wage growth of black workers and that white workers derive much greater wage growth from an additional year of labour market experience. And that black women have the largest estimated returns to firm tenure and the smallest returns to labour market experience. These results, however, seem to be largely driven by greater uncertainty around the expected productivity of black workers and unobservable heterogeneity in the quality of worker-firm matches.
Using Land Administration (or land governance) as a prism to examine land tenure, the paper argues that repurposing the national land administration system as a whole could vastly strengthen tenure security in the former homelands, where land administration has collapsed. Tenure security should be understood in broader terms than rights, access, allocation or title, but in terms of the entire spectrum of functions that enable and enforce tenure rights. Rights are made real by a range of functions, mostly carried out by the private sector. These include adjudication; land information systems and data management; planning; surveying; valuation and taxation. It is the totality of these functions articulating in a coherent manner that makes rights real. These functions, however, often contradict the complex manner in which customary and local off-register systems of rights work. What is needed is the redesign of land administration that allows for new ways of documenting and adjudicating off-register rights to make them visible, predictable and justiciable, and to work in unison with the dominant system of land registration.
The promises of both land tenure reform and the restitution of land rights since 1994 have raised but not met the expectations of the long-term residents of the Wild Coast for change. The period from 1994 to the present is characterised by the removal of familiar systems of land tenure and administration, an official refusal to administer existing policy and legislation (both new and old), no land tenure reform, and no rural planning law. The handful of successful developments are characterised by persistent, local, small-scale, private sector business people with close community relations. In contrast major government initiatives such as the Wild Coast Spatial Development Initiative, Pondoland National Park, Dwesa-Cwebe restitution have failed. The key limitation on external investment is not land tenure arrangements, whether precarious or not, but rather the more general breakdown of governance across all three spheres. Furthermore there is an inherent contradiction between the concept of “Wild Coast” and conventional notions of “development”.
In relative terms South Africa’s former homelands remain economically underdeveloped, both agriculturally and otherwise. To what extent is this a function of inadequate tenure security? The report presents basic concepts regarding land tenure, summarises what is known about the contribution of enhanced tenure security and tenure formalisation to investment and development, and concludes with some thoughts about the applicability of the discussion to economic development in South Africa’s former homelands. While the accumulated evidence from Africa and elsewhere suggests that enhanced tenure security is associated with more investment and higher productivity, perceived tenure insecurity over rural land in South Africa’s former homelands appears fairly minor; the case has not been made that the generally weak current state of former homeland agriculture has much to do with tenure insecurity. On the other hand, South Africa has relatively little arable land, of which a share appears to be under-utilised land in the former homelands; in other words, the scarcity value of this land is greater than local economic (in-)activity would suggest, and it is conceivable that improved tenure security now could lead to discernible improvements in investment and production in the medium or long-term, in particular through more active rental markets.
The dominant perspective on the economic situation of the former homelands is that the long-term deliberate neglect of the reserves/homelands/Bantustans, has left a legacy of poverty and stagnation. Moreover, the legacy of this neglect is so stubborn as to defy current attempts to change it. While this characterisation may be largely correct, there is also evidence to suggest that in some ways the former homelands are dynamic, and in fact more dynamic than ‘commercial farming areas’. The point of departure of this report is that some areas within the former homeland appears to exhibit signs of dynamism which are not understandable in terms of the ‘legacy perspective’. The paper uses a combination of secondary data and three case studies to better understand the nature of economic change in the former homelands of the Eastern Cape over the past 20 to 30 years. The report concludes that, although conditions within the former homelands remain relatively poor, they have indeed experienced significant economic and demographic change over the past few decades, not least in terms of the relationship between their towns and surrounding rural areas.
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