IDEAS home Printed from https://ideas.repec.org/p/sza/wpaper/wpapers140.html
   My bibliography  Save this paper

Numeric competence, confidence and school quality in the South African wage function: towards understanding pre-labour market discrimination

Author

Listed:
  • Gideon du Rand

    (Department of Economics, University of Stellenbosch)

  • Hendrik van Broekhuizen

    (Department of Economics, University of Stellenbosch)

  • Dieter von Fintel

    (Department of Economics, University of Stellenbosch)

Abstract

Highly convex estimates of average returns to education commonly found in South Africa are usually rationalised as being the result of a surplus of unskilled workers and a shortage of skilled workers in the economy (Keswell & Poswell, 2004). However, due to the absence of appropriate micro level data in the past, unbiased estimation of these returns has been difficult. This paper investigates potential sources of estimation bias using the NIDS 2008 survey, one of the first to contain concurrent information on individual labour market outcomes, numeric proficiency and quality of education received (which is highly diverse and unequal across the population). We compare naïve estimates in all relevant sub-samples with estimates that attempt to correct for the sample selection on numeracy (as the test was voluntary), as well as selection into employment. We also correct for (and exploit information on) the choice of test difficulty given to respondents, an option which was not intended in the design stage of the survey. This feature allows rough estimates of the influence of respondents’ confidence in their abilities on wages. More importantly, the sample selection adjustments allow us to control for numeracy and school quality, which influence the classic problem of ability bias in returns to education. We estimate the bias in returns to education as well as the extent of racial labour market discrimination that can be accounted for by schooling outputs rather than other features of the labour market. We assess whether convex returns to education can be explained by an unequal distribution of school quality, or whether conventional explanations (such as labour demand) remain the main explanation. Suggested remedies for selection on the endogenous numeracy measure include instrumental variables and a “Double Heckman” approach. Typical instrumental variables used in labour market analysis are poorly captured and restrict sample sizes to the extent that estimates often become nonsensical. The latter (non-standard) adjustments for sample selection issues show some promise but further evaluation and tests are required to fully rely on these results. Convex returns to education remain strongly present in the African population (after accounting for inequalities in schooling outputs), while they are concave for the white population. Bias in these returns is unreliably estimated for whites and Asians, but is highest for the more educated at a peak of 4.55 and 5.84 percentage points for the African and coloured populations respectively. Returns to numeracy, when more reliably identified, are convex. School outputs (measured in numeracy test scores and historical school performance) constitute a sizable part of discrimination estimates, accounting for between 18% and 36% of unexplained racial wage premia.

Suggested Citation

  • Gideon du Rand & Hendrik van Broekhuizen & Dieter von Fintel, 2011. "Numeric competence, confidence and school quality in the South African wage function: towards understanding pre-labour market discrimination," Working Papers 12/2011, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers140
    as

    Download full text from publisher

    File URL: https://www.ekon.sun.ac.za/wpapers/2011/wp122011/wp-12-2011.pdf
    File Function: First version, 2011
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Servaas van der Berg, 2007. "Apartheid's Enduring Legacy: Inequalities in Education-super- 1," Journal of African Economies, Centre for the Study of African Economies, vol. 16(5), pages 849-880, November.
    2. Hendrik van Broekhuizen & Dieter von Fintel, 2010. "Who Responds to Voluntary Cognitive Tests in Household Surveys? The Role of Labour Market Status, Respondent Confidence, Motivation and a Culture of Learning in South Africa," Working Papers 27/2010, Stellenbosch University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

    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. Mia de Vos, 2011. "Quantitative and qualitative aspects of education in South Africa: An analysis using the National Income Dynamic Study," Working Papers 06/2011, Stellenbosch University, Department of Economics.
    2. Martin Gustafsson, 2011. "The when and how of leaving school: The policy implications of new evidence on secondary schooling in South Africa," Working Papers 09/2011, Stellenbosch University, Department of Economics.
    3. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers 75, Southern Africa Labour and Development Research Unit, University of Cape Town.
    4. Fabrice Murtin & Thomas Laurent & Geoff Barnard & Dean Janse van Rensburg & Vijay Reddy & George Frempong & Lolita Winnaar, 2015. "Policy Determinants of School Outcomes under Model Uncertainty: Evidence from South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 83(3), pages 317-334, September.
    5. Badunenko, Oleg & Myeki, Lindikaya W, 2023. "Multidimensional Analysis of Attainment of Higher Education Goals in South Africa’s Public Universities: Access, Quality, Diversity, Success and Efficiency," MPRA Paper 121570, University Library of Munich, Germany.
    6. Jeremy Seekings, 2014. "The Social and Political Implications of Demographic Change in Post-Apartheid South Africa," The ANNALS of the American Academy of Political and Social Science, , vol. 652(1), pages 70-86, March.
    7. Rulof Burger & Rachel Jafta & Dieter von Fintel, 2016. "Affirmative action policies and the evolution of post-apartheid South Africa's racial wage gap," WIDER Working Paper Series wp-2016-66, World Institute for Development Economic Research (UNU-WIDER).
    8. Ito, Takahiro & Tanaka, Shinsuke, 2018. "Abolishing user fees, fertility choice, and educational attainment," Journal of Development Economics, Elsevier, vol. 130(C), pages 33-44.
    9. Servaas van der Berg & Cobus Burger & Ronelle Burger & Mia de Vos & Gideon du Rand & Martin Gustafsson & Eldridge Moses & Debra Shepherd & Nicholas Spaull & Stephen Taylor & Hendrik van Broekhuizen & , 2011. "Low quality education as a poverty trap," Working Papers 25/2011, Stellenbosch University, Department of Economics.
    10. Johan Fourie, 2016. "The long walk to economic freedom after apartheid, and the road ahead," Working Papers 11/2016, Stellenbosch University, Department of Economics.
    11. Martin Abel & Rulof Burger & Patrizio Piraino, 2017. "The value of reference letters," Working Papers 06/2017, Stellenbosch University, Department of Economics.
    12. Tania Ajam & Aron Janine, 2007. "Fiscal Renaissance in a Democratic South Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 16(5), pages 745-781, November.
    13. Heleen Hofmeyr, 2018. "Home background and schooling outcomes in South Africa: Insights from the National Income Dynamics Study," Working Papers 01/2018, Stellenbosch University, Department of Economics.
    14. Debra L. Shepherd, 2011. "Constraints to school effectiveness: what prevents poor schools from delivering results?," Working Papers 05/2011, Stellenbosch University, Department of Economics.
    15. Lam, David & Ardington, Cally & Branson, Nicola & Leibbrandt, Murray, 2013. "Credit constraints and the racial gap in post-secondary education in South Africa," SALDRU Working Papers 111, Southern Africa Labour and Development Research Unit, University of Cape Town.
    16. Hendrik van Broekhuizen, 2016. "Graduate unemployment and Higher Education Institutions in South Africa," Working Papers 08/2016, Stellenbosch University, Department of Economics.
    17. Chris van Wyk, 2015. "An overview of Education data in South Africa: an inventory approach," Working Papers 19/2015, Stellenbosch University, Department of Economics.
    18. Letsoalo M.E, 2017. "Disaggregated Analysis of Performances of Grade 12 Learners in Gauteng Province, Republic of South Africa," Journal of Education and Vocational Research, AMH International, vol. 8(2), pages 34-44.
    19. Martin Gustafsson & Servaas van der Berg & Debra Shepherd & Cobus Burger, 2010. "The costs of illiteracy in South Africa," Working Papers 14/2010, Stellenbosch University, Department of Economics.
    20. Grace Bridgman, 2020. "Correspondence between mathematics and mathematical literacy scores: an analysis from 2010 to 2018," Working Papers 03/2020, Stellenbosch University, Department of Economics.

    More about this item

    Keywords

    School quality; Labour Market Discrimination; Returns to Education; South Africa; Affirmative Action; Cognitive Skills;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

    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:sza:wpaper:wpapers140. 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: Melt van Schoor (email available below). General contact details of provider: https://edirc.repec.org/data/desunza.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.