Research

Policy research

Abstract (excerpt)

[...]Three decades after the end of apartheid, South Africa's economy is defined by stagnation and exclusion, and current strategies are not achieving inclusion and empowerment in practice. This report asks the question of why. Why is the economy growing far slower than any reasonable comparator countries? Why is exclusion so extraordinarily high, even after decades of various policies that have aimed to support socio-economic transformation? What would it take for South Africa to include more of its people, capabilities, assets, and ideas in the functioning of the economy, and why aren’t such actions being undertaken already? The Growth Lab has completed a deep diagnostic of potential causes of South Africa’s prolonged underperformance over a two-year research project. Building on the findings of nine papers and widespread collaboration with government, academics, business and NGOs, this report documents the project’s central findings. Bluntly speaking, the report finds that South Africa is not accomplishing its goals of inclusion, empowerment and transformation, and new strategies and instruments will be needed to do so. We found two broad classes of problems that undermine inclusive growth in the Rainbow Nation: collapsing state capacity and spatial exclusion.

Abstract

This report analyzes the economic legacy of spatial exclusion in South Africa, focusing on the long-term effects of the former Bantustan policy. Through quantitative analysis, the report explores the spatial dimension of economic activity in South Africa and specifically how this particular spatial institution has continued to shape current economic outcomes, despite past and present attempts to reverse the effect. The report also identifies areas for further research and potential intervention to enable more effective economic inclusion of the former homeland areas of the country.

Abstract

This paper argues that South Africa's persistently high unemployment is in part explained by abnormally low levels of informal sector activity compared to other developing countries. Using cross-country data, it shows that South Africa is an outlier, with low informality and high unemployment relative to its income level. If South Africa had informality rates consistent with its income level, unemployment would be much lower at around 7% instead of over 25%. The paper explores regulatory barriers, spatial constraints, lack of infrastructure, and crime as key factors inhibiting the growth of the informal sector. To boost informal activity and employment, it recommends a firm-size based policy matrix addressing these constraints, with a focus on regulatory changes to expand market access, zero-rating of licensing fees, provision of critical infrastructure like storage facilities, and transport vouchers and subsidies to connect informal businesses to markets. Implementing such supply-side policy changes could demonstrate the employment potential of the informal sector and build momentum for broader deregulation.

Academic research

Abstract

We examine the impact of language training on the economic integration of immigrants in France. The assignment to this training, offered by the French Ministry of the Interior, depends mainly on a precise rule: the training is provided if the test score of an initial language exam is below a certain threshold. This eligibility rule creates a discontinuity in the relation between the test result and the variables of interest, which is used to estimate the causal effect of language training, through the method of Regression Discontinuity Design. We find that the number of assigned hours of training significantly increases labor force participation of the treated individuals. The language classes appear to have a larger effect for individuals with higher levels of education, while there is no robust differential effect by type of migration, gender or age. Our estimated coefficients are remarkably similar when we rely on local linear regressions using the optimal bandwidth with few observations around the threshold and when we control parametrically for a polynomial of the forcing variable and use the whole estimation sample. We conclude with a discussion of the candidate mechanisms for the improved labor market participation of immigrants.

Abstract

Can South Africa’s segregation policies explain, at least partially, its current poor employment outcomes? To explore this question, we study the long-term impact of the forced resettlement of around 3.5 million black South Africans from their communities to the so-called “homelands” or “Bantustans”, between 1960 and 1991. Our empirical strategy exploits the variability in the magnitude of resettlements between communities. Two main findings. First, the magnitude of outgoing internal migrations was largest for districts close to former homelands. Second, districts close to former homelands have higher rates of non-employed population in 2011. Together the evidence suggests that districts that experienced racial segregation policies most intensely, as measured by outgoing forced resettlements, have worse current employment outcomes.

Doctoral dissertation

Summary

This dissertation aims at shedding light on the interplay between human mobility, cultural identity and globalization. The critical role that human mobility and cultural identity play in the history of economic development is undeniable, for both phenomena accompany humankind throughout space and time. The questions I answer in this dissertation intend to focus on three aspects of these phenomena, that are at the core of the current public debate. I address these questions using novel data, partly coming from recently digitized historical files in the context of this doctorate. I provide conceptual, historical and theoretical frames for each topic, while relying on rigorous state-of-the-art econometric methods to infer causality. Following an introduction on the economics of migration and diversity, the core of this dissertation comprises three research papers. The first paper evaluates the effects of language training on the economic integration of immigrants; the second highlights the role of cultural identity and economic factors when taking the decision to emigrate, and the third investigates the effects that misleading information can have on the formation of cultural identity.