South African Journal of Economics

Publisher:: Wiley
Publication date:: 2021-02-01

ISBN:: 0038-2280

Issue Number

No. 91-4, December 2023

Latest documents

Issue Information
No abstract is available for this article.
The labour market and poverty impacts of COVID‐19 in South Africa
We estimate COVID‐19‐related employment and poverty impacts in South Africa. We observe a 40% decline in active employment between February and April 2020, half of which was composed of job terminations rather than furloughs. Initially, vulnerable groups were disproportionately affected by the labour market shock. Exploiting the dataset's panel dimension and comparing lockdown incomes of job losers to reweighted job retainers, we estimate that approximately 15%–35% of job losers fell into poverty in April. We find evidence of a limited recovery in the labour market and a decrease in poverty by June, in part attributable to expanded emergency social assistance.
Productivity and reallocation under monopolistic competition: A Micro panel data analysis
This article studies the structural aggregate productivity growth (APG) decomposition with demand‐ and supply‐side controls, determines comparative statics predictions for firms and economic outcomes and examines patterns of input distortions. By moving from price‐taking conditions to markets featuring markup heterogeneity for product varieties, the paper finds amplification of production inefficiency from −3.61% to −11.41% and amplification of total factor reallocation from 0.15% to 8.91%. The productivity results are robust to structural variations in the demand function, firm scale adjustment and firm growth. Similarly, input reallocation is robust to variation in demand structure and plant expansion. Furthermore, reallocation under common markups among all firms is robust to reallocation under heterogeneous markups among larger firms. Alternatively, large firms face demand inelasticities and charge higher markups thereby mimicking the behaviour of the survey of all firms. Under autarky, small unproductive plants charge higher markups than their small efficient counterparts. Demand elasticity increases (decreases) with industry output for smaller (larger) plants. Finally, a unit increase in capital intensity for resource‐constrained plants raises labour distortions and reduces capital distortions while reducing capital distortions for resource‐unconstrained firms.
Ruggedness and child health outcomes: Evidence from Burundi, Cameroon, Ethiopia and Nigeria
This paper examines the effect of terrain ruggedness on child stunting in Burundi, Cameroon, Ethiopia and Nigeria. Using a cross‐section analysis with data from the Demographic and Health Surveys (DHS) and a measure that captures variation in the terrains of the countries, we find that the more difficult it is to traverse the terrain in Burundi, Cameroon and Nigeria, the higher the likelihood of child stunting. However, this association is not consistent for Ethiopia until we account for the Oromia region, which has the capital city Addis Ababa. These results remain robust with the inclusion of socio‐economic factors related to child health (e.g. maternal health, maternal education and household income), demographic factors (e.g. gender of child), other geographical factors (e.g. rainfall patterns and malaria prevalence) and survey and region effects. The results suggest that there are complementary factors to geography that may contribute to poor child health outcomes, such as the quality of infrastructure and the ability to access healthcare services. Given that child health is a key development outcome, understanding such spatial variations associated with child health inequalities can assist in designing effective intervention programmes and allocating resources where they are most needed.
Effects of terrorism and economic policy uncertainty on economic complexity in Africa: A study of the moderating role of governance institutions
Following the paucity of empirical evidence on the effects of terrorism and uncertainty on economic complexity in Africa and the moderating role of governance institutions on these relationships, this study raised two important questions. First, how are terrorism and uncertainty impacting on economic complexity in Africa? Second, how are governance institutions moderating the effects of terrorism and uncertainty on economic complexity in Africa? To answer these questions, the study employed pooled ordinary least squares and dynamic system generalized method of moments (GMM) estimators, with a panel of 33 African countries over the period 2010–2021. We find that the unconditional effects of terrorism and uncertainty on economic complexity in Africa are predominantly negative and significant. We also find that governance institutions predominantly have unconditional positive and significant impact on economic complexity in Africa but failed to moderate the adverse effect of uncertainty on economic complexity. However, trade openness, international tourism and lagged economic complexity are potent factors promoting economic complexity in Africa, while physical capital stock remained a deterring factor. The study concluded that policymakers and leaders in Africa should engage in collaborative efforts at the African Union level to promote high‐quality institutions, while simultaneously addressing the detrimental effects of terrorism and uncertainty on the continent.
The impact of agricultural minimum wages on worker flows in South Africa
This paper is the first to provide estimates of how minimum wages affect worker flows and employment growth rates in an employment scarce developing country context. We investigate the effects of a large, exogenous increase in agricultural minimum wages in South Africa. We find that changes occurred primarily among non‐seasonal workers. Non‐seasonal agricultural employment growth decreased in the initial periods after the minimum wage hike. This was mainly driven by slower rates of entry. The effect on the rate of entry decreases over time. While farms also responded by shedding non‐seasonal workers at higher rates, this negative effect was limited to 1 year directly after the minimum wage hike. Employment growth recovers 4 years after the policy shock, indicating that firms adjusted relatively quickly despite the large legislated minimum wage increase. Seasonal employment growth and rates of entry and exit of seasonal workers were for the most part unaffected. Descriptive statistics, however, suggest a slight compositional change among seasonal workers: Farms replaced the worst paid seasonal workers with other low‐income workers who were slightly better paid and presumably more productive.
Issue Information
No abstract is available for this article.
Export capacity and capital stock augmentation through imports: Evidence from Sub‐Saharan African countries
This paper investigates the capital goods imports of Sub‐Saharan African (SSA) countries from 2002 to 2017. The composition of capital goods imports has become less diverse over time in more than half of the countries studied. Colonial ties no longer determine the sourcing of capital goods as China is now the top source. Trade gravity regressions using the Poisson pseudo‐maximum‐likelihood estimator show that bilateral exports of non‐primary products by SSA countries and their low‐income peers are associated with increased net stock of imported general‐purpose capital goods. Additionally, there is evidence that the net stock of some types of imported equipment and machinery is associated with increased non‐primary exports of items utilising these capital goods with elasticity estimates ranging from 0.10 to 1.10. Thus, there is some form of economic restructuring in the region gleaned from increased exports of non‐primary products brought about by capital stock augmentation through imports.
Government social protection programme spending and household welfare in Lesotho
Lesotho has notably high levels of poverty and inequality despite a high level of government spending on social protection programmes. We assess the performance of this spending in reducing consumption poverty and inequality, applying benefit incidence and microsimulation methods to 2017/2018 household survey data. We investigate the distributional effects of actual spending as well as those of a hypothetical alternative in which the spending is targeted through a proxy means test (PMT) formula used by the government for some programmes. We find that government spending on social protection programmes in Lesotho substantially reduces poverty and inequality. For most programmes, the hypothetical alternative of targeting spending to poorer households through the government's PMT formula would have no better distributional effects than current programme spending. The exception is postsecondary education bursaries, which are costly and regressive. Retaining bursaries only for poorer students, and reallocating the outlay this saves to a transfer targeted to poorer households through the government's PMT formula, could reduce poverty and inequality significantly.
Impact of capital regulation on interest rate pass‐through in Sub‐Saharan Africa
Using monthly data from 2005 to 2019, we employ a dynamic heterogeneous cross‐sectionally autoregressive distributed lag (CS‐ARDL) model to examine the impact of higher regulatory capital requirements on the interest rate pass‐through (IRPT) to bank lending and deposit rates in 22 Sub‐Saharan Africa (SSA) countries. Two key findings emerge from the investigation: (i) the average IRPT in SSA is incomplete in the long run, and (ii) stringent (higher) regulatory capital requirements reduce the pass‐through of monetary policy to commercial bank lending and deposit rates. The findings suggest that although higher regulatory capital requirements are an effective macro‐prudential tool for enhancing the stability of the banking sector, they could also have the unintended consequences of limiting economic expansion. This trade‐off calls for a careful analysis and balance in the implementation of monetary and bank regulatory policies in the region.