Von Fintel, Dieter (2014-12)
ENGLISH ABSTRACT: Microeconometric techniques have improved understanding of South Africa’s labour market substantially in the last two decades. This dissertation adds to this evidence by considering three separate labour market questions, with particular attention to data quality and the application of credible methodology. Firstly, wage flexibility is investigated. Whereas selected previous microeconometric evidence suggests that wage setters in South Africa are highly responsive to external local labour market circumstances, it is not corroborated by macroeconomic and other microeconometric studies. This question is interrogated again, with particular attention to methodological issues in wage curve estimation. The latter is a robust negative relationship between individual wages and local unemployment rates, found in most countries, except where bargaining is highly centralized. Adding time variation to the data allows controls for spatial heterogeneity to be introduced, leading to the conclusion that wages are really inflexible in the short-run. Rather, the trade-off between wages and local unemployment that previous work has found represents a long-run spatial equilibrium. This finding is robust to instrumentation for reverse causality and the measurement error that is associated with choosing incorrect labour market demarcations. Secondly, the reliability of retrospective data related to childhood is investigated, with the view of estimating the long-run influence that early life circumstances have on adult outcomes. Two indicators, parental education and subjective rankings of childhood socioeconomic status, are evaluated. The first set of indicators has poor response rates, as many South African children live without their parents. Where respondents do volunteer this information, they answer consistently across waves. Subjective rankings have higher response rates, as they require respondents to provide information about their own past, and not about those of their parents. However, individuals’ assessments are inconsistent over time, despite being asked about the same point in the life cycle. They tend to change their view of the past in line with adjustments to perceptions of their position in the village income distribution and subjective well-being, providing clear evidence of anchoring. Instrumental variables analysis has been used in previous studies to account for measurement error in subjective data. However, if anchoring affects all assessments of the past and potential outcome variables (such as employment), microeconometric techniques will yield biased estimates of the effects of childhood on long-run outcomes. Finally, age-period-cohort models for South African labour force participation are estimated. This chapter is the first contribution to relax the assumption that cohort differences must remain permanent over the life cycle. Monte-Carlo simulation studies show that highly interactive specifications can partially recover the true underlying process. Using a variety of techniques (imposing behavioural restrictions and atheoretical approaches), this study shows that cohort effects in labour force participation can be temporary in South Africa, though more data is required to verify this conclusively. Regardless of technique, a distinct surge in labour force participation is noted for the group born after 1975. Pertinently, the combination of testable assumptions and highly flexible estimation can yield credible age-period-cohort profiles, despite the many disputes noted in the literature. Previous evidence of a surge in participation for the post-1975 cohort can now be shown to be temporary rather than a part of a long-run generational increase.
AFRIKAANSE OPSOMMING: Mikro-ekonometriese tegnieke het kennis oor die Suid-Afrikaanse arbeidsmark aansienlik uitgebrei in die afgelope twee dekades. Hierdie proefskrif dra by tot hierdie bewyse deur drie afsonderlike arbeidsmark vraagstukke te beskou, met die klem op datagehalte en toepassing van geloofwaardige metodologie. Eerstens word die kwessie van loonaanpasbaarheid beskou. Waar sekere vorige mikro-ekonometriese bewyse aandui dat loonbepalers in Suid-Afrika sterk op eksterne plaaslike arbeidsmarktoestande reageer, word hierdie bevinding nie deur makro-ekonomiese en ander mikro-ekonometriese studies ondersteun nie. Hierdie vraag word dus opnuut ondersoek, met die klem op metodologiese kwessies wat ‘n invloed op die beraming van die loonkurwe het. Laasgenoemde is die negatiewe verhouding tussen individuele lone en plaaslike werkloosheidskoerse wat in die meeste lande geld, behalwe daar waar loonbedinging sterk gesentraliseer is. Deur tydsvariasie by die data te voeg, is dit moontlik om vir heterogeniteit oor ruimte voorsiening te maak, wat tot die gevolgtrekking lei dat lone inderdaad onbuigsaam oor die korttermyn is. Die afruiling tussen lone en plaaslike werkloosheidskoerse wat vorige navorsing bevind het, verteenwoordig eerder ‘n langtermyn ruimtelike ewewig. Hierdie bevinding is nie sensitief vir instrumentasie nie. Laasgenoemde is nodig om voorsiening te maak vir moontlike sydigheid wat kan ontstaan indien die rigting van kousaliteit omgekeerd is, sowel as metingsfoute wat daarmee gepaard gaan as navorsers die plaaslike arbeidsmark verkeerd definiëer. Tweedens word die betroubaarheid van data wat volwassenes vra om hulle kinderomstandighede te onthou, ondersoek. Die uiteindelike doel is om vas te stel of omstandighede vroeg in die lewe ‘n invloed op die uitkomstes van volwassenes het. Twee veranderlikes, naamlik ouers se opvoedingsvlakke en die subjektiewe terugskouende sosioekonomiese rang in respondente se kinderdae, word geëvalueer. Die eerste stel veranderlikes is onderhewig aan lae reaksiekoerse omdat ‘n aansienlike hoeveelheid Suid-Afrikaanse kinders sonder een of beide ouers grootword. Waar respondente wel hierdie inligting verskaf is individue se antwoorde konsekwent tussen twee golwe van ‘n paneelopname. Die vraag na die subjektiewe rang lewer beter reaksiekoerse omdat dit vereis dat respondente inligting oor hulle eie verlede verskaf, en nie oor dié van hul ouers nie. Nietemin is individue se antwoorde strydig oor tyd, ten spyte daarvan dat hulle inligting oor dieselfde tydstip in die lewenssiklus moet verskaf. Hulle is geneig om hulle opinies oor die verlede in lyn met veranderende persepsies van hul huidige posisie in die dorpsinkomsteverdeling, sowel as hulle eie subjektiewe welstand, aan te pas. Dit verskaf dus ‘n sterk aanduiding dat mense hulle antwoorde oor die verlede in huidige toestande anker. Instrumentele veranderlike analise is in vorige studies aangewend om voorsiening te maak vir metingsfoute in subjektiewe data. Indien inligting oor die verlede, asook moontlik uitkomsteveranderlikes (soos indiensname), geanker word in huidige persepsies, sal mikroekonometriese tegnieke egter steeds sydige beramings van die impak van kinderdae op langtermyn uitkomstes bied. Laastens, word sogenaamde ouderdom-periode-kohort modelle op Suid-Afrikaanse arbeidsmarkdeelname data toegepas. Hierdie hoofstuk is die eerste bydrae wat die aanname dat kohortverskille permanent moet bly oor die lewenssiklus laat vaar. Monte-Carlo simulasies dui aan dat hoogs interaktiewe spesifikasies die onderliggende proses gedeeltelik kan weerspieël. Verskeie tegnieke word aangewend (insluitend dié wat gedragsaannames afdwing asook ateoretiese benaderings) wat wys dat kohorteffekte in arbeidsmarkdeelname tydelik kan wees. Tog word meer data benodig om hierdie stelling sonder twyfel te bevestig. Onafhanklik van die tegniek wat gebruik word, is dit duidelik dat ‘n skerp toename in arbeidsmarkdeelname plaasgevind het vir die groep wat na 1975 gebore is. Verder is dit beduidend dat die kombinasie van toetsbare aannames en hoogs buigsame beramers ‘n geloofwaardige oplossing vir die ouderdoms-periode-kohort probleem verskaf, ten spyte van die vele twispunte wat in die literatuur uitgelig word. Vorige bewyse van ‘n toename in arbeidsmagdeelname vir die post-1975 kohort kan nou as ‘n tydelike tendens bestempel word, eerder as ‘n deel van die langtermyn toename oor generasies.
Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/96023