The DPRU is currently engaged in a variety of interesting and diverse projects and studies. Our research programme has recently been able to enter new terrain, principally through the availability of unique or new datasets. Be it the data on recipients of unemployment insurance, or dispute resolution, or even strikes, these novel datasets have opened up an entirely new and rich set of economic and econometric questions, which were not previously possible.
Labour Market Intelligence Research Programme (LMI)
The Department of Higher Education and Training (DHET) with support from the National Skills Fund (NSF) has approved the implementation of a new phase of the Labour Market Intelligence (LMI) Research Programme. The University of Cape Town (UCT), and specifically the Development Policy Research Unit (DPRU), will be acting as Project Managers. The aim of this programme is to establish a credible institutional mechanism for skills planning.
The LMI research programme comprises several research projects related to the identification of current and future skills needs and shortages, the identification of interventions required to address skills needs and shortages, and the exploration of ideological, philosophical and empirical approaches to understanding the relationship between education and the economy. Broadly speaking, the overarching work of the researchers undertaking this project will, over a five-year period, essentially involve identifying and measuring the extent of skills imbalances in the labour market. It will conduct research, collect information, track vacancies, analyse findings and inform labour market information users of ‘bottlenecks’ in skills demand and supply in the labour market.
Outputs: Expected: 2019-2024.
Inclusive Growth Programme (IGP)
The Inclusive Growth Programme (IGP) is an initiative of the Department of Trade and Industry, established with the aim of identifying, investigating and implementing innovative and practical interventions to the key challenges facing the South African economy. The initiative has been established in collaboration with Business and Labour.
The IGP’s key strategic objectives are to:
- Establish a high-level policy forum where Government, Business and Organised Labour can regularly engage constructively with a view to improving economic policy design, policy co-ordination and coherence, joint development of mitigation measures where necessary, and enforcement and compliance of key economic policies.
- Facilitate transformation of the economy to promote industrial development, investment, competitiveness and employment creation.
- Facilitate broad-based black economic participation through targeted interventions to achieve more inclusive growth.
The Development Policy Research Unit (DPRU) will be acting as Project Managers for this programme.
Empirical evidence indicates that the South African labour market has been characterized by a U-shaped earnings growth pattern over the post-apartheid period. The bottom and top percentiles of the wage distribution have experienced higher wage growth relative to those in the middle. This pattern, or ‘missing middle’, is similar to what has been termed ‘wage polarization’ in the developed world. Research on the topic of wage polarization, however, has focused almost exclusively on industrialised countries making this work a contribution towards the characterization of wage polarization in an emerging economy. Further to this, we may expect the manifestation of and processes behind wage polarization to differ in emerging compared to industrialised economies because of key differences in their labour markets. In the literature on wage inequality in developed economies, the impact of technology on tasks and the occupational demand for labour plays a key role in explaining variation in wage growth along the distribution.
We investigate the relevance of this framework for South Africa along with three other competing and complementary explanations for a U-shaped earnings growth pattern. These include broad-based change in sectoral composition, such as the decline of manufacturing and the emerging dominance of services; skills-biased job growth in a context of high inequality in schooling quality; and, the role of labour market institutions, such as minimum wages, unions and public sector employment. We investigate the relative importance of each of these factors using a Recentered Influence Function regression on a harmonised series of South African labour force datasets merged with the Occupational Information Network (O*NET) for 2000 to 2015. Different explanations prove more or less pertinent at different portions of the distribution. Minimum wages have been key to shoring up wage growth at the bottom of the distribution. Workers in the middle of the distribution have suffered from an oversupply of similarly educated entrants, as well as, the decline of manufacturing and negative returns to the routine type work carried out by the typical worker in this portion of the distribution. Strong growth at the top end has been reinforced by skills-biased developments in all four frameworks.
Outputs: Papers and journal articles due 2020
Property Crime and Inequality: the Case of South Africa
It is well established in the literature that property crime rates increase with increasing levels of inequality. However, most research in this area comes from contexts of low-to-moderate crime and inequality rates. This paper explores whether this relationship holds in a context of extreme levels of crime and inequality, using South Africa as a case study. We use cross-sectional precinct-level property crime rates from 2011 combined with census data. We perform non-parametric, semi-parametric, and parametric analyses to uncover the nature of the property crime-inequality relationship and find strong evidence of a positive linear relationship between property crime and an interaction term of income with inequality, but strong evidence of a negative relationship between property crime and inequality on its own. This result is robust to various measures of inequality. One explanation for this finding could be that inequality acts as a signal to relatively richer residents in an area (local elites) that they are more at risk of falling victim to crime. As a consequence of this mechanism, local elites start investing in protective measures which could dampen crime rates.
Outputs: This research is to be presented at the 2019 Jobs & Development Conference in Washington D.C. A working paper is due to be published later in 2019.
Gender Analysis of the Department of Trade and Industry Services and Funding Processes
The Department of Women commissioned the DPRU to determine the extent to which women access and benefit from the services offered by the Department of Trade and Industry (the dti). A fieldwork exercise will involve interviews with previous participants of various dti incentives in order to determine the impact of additional funding or support on various pre-determined outcomes.
Outputs: Expected: 2020.