IDEAS home Printed from https://ideas.repec.org/p/cid/wpfacu/138a.html
   My bibliography  Save this paper

Diagnosing South Africa’s High Unemployment and Low Informality

Author

Listed:
  • Kishan Shah

    (Center for International Development at Harvard University)

Abstract

This report analyzes the causes and consequences of South Africa’s high rates of unemployment and the unique nature of labor market exclusion in the country. It leverages a combination of new quantitative analysis using South African datasets and international datasets for benchmarking, together with synthesis of existing literature and case studies. The goal is to: (1) characterize the challenge of labor market exclusion in South Africa, (2) identify ways in which this is similar and different to other countries, (3) understand what drives the unique challenges of the labor market in South Africa, and (4) narrow down what policy areas are most important to address the underlying drivers. This report takes a diagnostic approach to understand the causes of South Africa’s unique pattern of low informality.

Suggested Citation

  • Kishan Shah, 2022. "Diagnosing South Africa’s High Unemployment and Low Informality," CID Working Papers 138a, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:138a
    as

    Download full text from publisher

    File URL: https://growthlab.cid.harvard.edu/files/growthlab/files/2022-09-cid-fellows-wp-138-south-africa-labor-markets.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Danquah Michael & Schotte Simone & Sen Kunal, 2021. "Informal work in sub-Saharan Africa: Dead end or stepping-stone?," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-44, January.
    2. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    3. Cally Ardington & Anne Case & Victoria Hosegood, 2007. "Labor Supply Responses To Large Social Transfers: Longitudinal Evidence From South Africa," Working Papers 1021, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
    4. World Bank, 2020. "Poverty and Shared Prosperity 2020," World Bank Publications - Books, The World Bank Group, number 34496.
    5. repec:pri:cheawb:case_ardington_hosegood_nber_w13442_oct07 is not listed on IDEAS
    6. Douglas Barrios & Federico Sturzenegger & Frank Muci & Patricio Goldstein & Ricardo Hausmann, 2022. "Macroeconomic risks after a decade of microeconomic turbulence: South Africa 2007-2020," Growth Lab Working Papers 182, Harvard's Growth Lab.
    7. Haroon Bhorat & Ravi Kanbur & Natasha Mayet, 2013. "The impact of sectoral minimum wage laws on employment, wages, and hours of work in South Africa," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-27, December.
    8. repec:pri:rpdevs:case_ardington_hosegood_nber_w13442_oct07 is not listed on IDEAS
    9. Simone Schotte & Rocco Zizzamia & Murray Leibbrandt, 2022. "Snakes and ladders and loaded dice: Poverty dynamics and inequality in South Africa between 2008 and 2017," South African Journal of Economics, Economic Society of South Africa, vol. 90(2), pages 214-242, June.
    10. Grabrucker, Katharina & Grimm, Michael, 2018. "Does crime deter South Africans from self-employment?," Journal of Comparative Economics, Elsevier, vol. 46(2), pages 413-435.
    11. Victoria Hosegood & Anne Case & Cally Ardington, 2009. "Labor Supply Responses to Large Social Transfers: Longitudinal Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(1), pages 22-48, January.
    12. Gindling,T. H. & Mossaad,Nadwa & Newhouse,David Locke, 2016. "Earnings premiums and penalties for self-employment and informal employees around the world," Policy Research Working Paper Series 7530, The World Bank.
    13. Geeta Gandhi Kingdon & John Knight, 2006. "How Flexible are Wages in Response to Local Unemployment in South Africa?," ILR Review, Cornell University, ILR School, vol. 59(3), pages 471-495, April.
    14. Kingdon, Geeta Gandhi & Knight, John, 2004. "Unemployment in South Africa: The Nature of the Beast," World Development, Elsevier, vol. 32(3), pages 391-408, March.
    15. Gabriela Inchauste & Nora Lustig & Mashekwa Maboshe & Catriona Purfield & Ingrid Woolard, 2015. "Distributional Impact of Fiscal Policy in South Africa," Commitment to Equity (CEQ) Working Paper Series 29, Tulane University, Department of Economics.
    16. Olivier Bargain & Prudence Kwenda, 2010. "Is Informality Bad? - Evidence from Brazil, Mexico and South Africa," Working Papers 201003, School of Economics, University College Dublin.
    17. Carlos Góes & Ms. Izabela Karpowicz, 2017. "Inequality in Brazil: A Regional Perspective," IMF Working Papers 2017/225, International Monetary Fund.
    18. Abel, Martin, 2013. "Unintended labour supply effects of cash transfer programmes: Evidence from South Africa's old age pension," SALDRU Working Papers 114, Southern Africa Labour and Development Research Unit, University of Cape Town.
    19. Derek Yu, 2009. "The comparability of Labour Force Survey (LFS) and Quarterly Labour Force Survey (QLFS)," Working Papers 08/2009, Stellenbosch University, Department of Economics.
    20. Alessandro Tondini & Cally Ardington & Ingrid Woolard, 2017. "Public pensions and elderly informal employment: Evidence from a change in retirement age in South Africa," SALDRU Working Papers 206, Southern Africa Labour and Development Research Unit, University of Cape Town.
    21. Gabriela Inchauste & Nora Lustig & Mashekwa Maboshe & Catriona Purfield & Ingrid Woolard, 2015. "Distributional Impact of Fiscal Policy in South Africa," Commitment to Equity (CEQ) Working Paper Series 1329, Tulane University, Department of Economics.
    22. Haroon Bhorat & Adaiah Lilenstein & Ben Stanwix, 2021. "The Impact of the National Minimum Wage in South Africa: Early Quantitative Evidence," Working Papers 202104, University of Cape Town, Development Policy Research Unit.
    23. Caroline Skinner, 2008. "The struggle for the streets: processes of exclusion and inclusion of street traders in Durban, South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 25(2), pages 227-242.
    24. Ihsaan Bassier, 2021. "The impact of centralized bargaining on spillovers and the wage structure in monopsonistic labour markets," WIDER Working Paper Series wp-2021-132, World Institute for Development Economic Research (UNU-WIDER).
    25. Ihsaan Bassier & Ingrid Woolard, 2021. "Exclusive Growth? Rapidly Increasing Top Incomes Amid Low National Growth in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 89(2), pages 246-273, June.
    26. repec:pri:cheawb:case_ardington_hosegood_nber_w13442_oct07.pdf is not listed on IDEAS
    27. Uma RANI & Patrick BELSER & Martin OELZ & Setareh RANJBAR, 2013. "Minimum wage coverage and compliance in developing countries," International Labour Review, International Labour Organization, vol. 152(3-4), pages 381-410, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ricardo Hausmann & Tim O'Brien & Andres Fortunato & Alexia Lochmann & Kishan Shah & Lucila Venturi & Sheyla Enciso & Ekaterina Vashkinskaya & Ketan Ahuja & Bailey Klinger & Federico Sturzenegger & Mar, 2023. "Growth Through Inclusion in South Africa," CID Working Papers 434, Center for International Development at Harvard University.
    2. Bhorat, Haroon & Köhler, Timothy, 2025. "The labour market effects of cash transfers to the unemployed: Evidence from South Africa," World Development, Elsevier, vol. 188(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kishan Shah, 2022. "Diagnosing South Africa’s High Unemployment and Low Informality," Growth Lab Working Papers 193, Harvard's Growth Lab.
    2. Alessandro Tondini & Cally Ardington & Ingrid Woolard, 2017. "Public pensions and elderly informal employment: Evidence from a change in retirement age in South Africa," SALDRU Working Papers 206, Southern Africa Labour and Development Research Unit, University of Cape Town.
    3. von Fintel, Dieter & Pienaar, Louw, 2016. "Small-Scale Farming and Food Security: The Enabling Role of Cash Transfers in South Africa's Former Homelands," IZA Discussion Papers 10377, Institute of Labor Economics (IZA).
    4. Mitra, Sophie, 2010. "Disability Cash Transfers in the Context of Poverty and Unemployment: The Case of South Africa," World Development, Elsevier, vol. 38(12), pages 1692-1709, December.
    5. Manea, Roxana Elena & Piraino, Patrizio & Viarengo, Martina, 2023. "Crime, inequality and subsidized housing: Evidence from South Africa," World Development, Elsevier, vol. 168(C).
    6. Carlos Bozzoli, 2010. "A Lost Generation? Long Term Socioeconomic Outcomes in Orphans," Discussion Papers of DIW Berlin 1069, DIW Berlin, German Institute for Economic Research.
    7. Unnikrishnan, Vidhya & Imai, Katsushi S., 2020. "Does the old-age pension scheme improve household welfare? Evidence from India," World Development, Elsevier, vol. 134(C).
    8. Bhorat, Haroon & Köhler, Timothy, 2025. "The labour market effects of cash transfers to the unemployed: Evidence from South Africa," World Development, Elsevier, vol. 188(C).
    9. d'Agostino, Giorgio & Scarlato, Margherita, 2016. "Gender Inequality in the South African Labour Market: the Impact of the Child Support Grant," MPRA Paper 72523, University Library of Munich, Germany.
    10. Dieter von Fintel & Eldridge Moses, 2017. "Migration and gender in South Africa: following bright lights and the fortunes of others?," Working Papers 09/2017, Stellenbosch University, Department of Economics, revised 2018.
    11. Kacker, Kanishka, 2019. "Social transfers and labor supply: Long run rvidence from South Africa," MPRA Paper 99044, University Library of Munich, Germany.
    12. Agüero,Jorge M. & Fasola,Eniola, 2022. "Distributional Policies and Social Cohesion in a High-Unemployment Setting," Policy Research Working Paper Series 10103, The World Bank.
    13. Sinyolo, Sikhulumile & Mudhara, Maxwell & Wale, Edilegnaw, 2016. "To what extent does dependence on social grants affect smallholder farmers’ incentives to farm? Evidence from KwaZulu-Natal, South Africa," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(2), pages 1-12.
    14. Kishan Shah & Federico Sturzenegger, 2023. "Search, Transport Costs, and Labor Markets in South Africa," CID Working Papers 142a, Center for International Development at Harvard University.
    15. Olivier Donni & Eliane El Badaoui, 2024. "Labor Supply In The Extended Household: Economies Of Scale, Self‐Selection, And The Intrahousehold Distribution Of Resources In South Africa," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 65(1), pages 191-215, February.
    16. Margherita Scarlato & Giorgio D'Agostino, 2016. "Gender Disparities In The South African Labour Market: The Impact Of The Child Support Grant," Departmental Working Papers of Economics - University 'Roma Tre' 0210, Department of Economics - University Roma Tre.
    17. Salehi-Isfahani, Djavad & Mostafavi-Dehzooei, Mohammad H., 2018. "Cash transfers and labor supply: Evidence from a large-scale program in Iran," Journal of Development Economics, Elsevier, vol. 135(C), pages 349-367.
    18. Eliane El Badaoui & Riccardo Magnani, 2020. "Tax Policies and Informality in South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(3), pages 267-301, April.
    19. Timothy Köhler & Jabulile Monnakgotla & Haroon Bhorat, 2024. "Social Security Coverage among the Working-Age Population in South Africa," Working Papers 202404, University of Cape Town, Development Policy Research Unit.
    20. Jessica Standish-White & Arden Finn, 2015. "Unconditional cash transfers and children's educational outcomes: Evidence from the old-age pension programme in South Africa ," SALDRU Working Papers 147, Southern Africa Labour and Development Research Unit, University of Cape Town.

    More about this item

    Keywords

    Poverty; Inclusive Growth; Skills & Human Capital;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cid:wpfacu:138a. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chuck McKenney (email available below). General contact details of provider: https://edirc.repec.org/data/ciharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.