Why Has Unemployment Risen in the New South Africa
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.
We thank David Deming, Matias Horenstein, Vimal Ranchhod and Paulo Somaini for research assistance. Special thanks to Jairo Arrow, Jacques deKlerk, and the rest of the team at StatsSA. This paper is part of a project at the CID, Harvard University. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2008. "Why has unemployment risen in the New South Africa?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(4), pages 715-740, October. citation courtesy of