REALM Round 2
To access REALM round 1, click here
Contact person
Dr Neil Rankin (neilrankin@sun.ac.za)
Description
This project, funded by the International Development Research Centre, Canada, aims to provide more evidence on how labour markets across a number of different African countries respond to crises, and how these responses differ across different labour market participants, for example by gender and youth.
An important component of this research is the dynamic aspect of how the impact changes with time, how the labour market trajectories of individuals change, and the links between firm outcomes and labour markets. In order to do this, we need to analyse microeconomic data from firms and individuals. This data comes from a number of different sources. We use data drawn from statistical agencies, from existing and new surveys, and where possible we used panel data that followed the same observational unit (individual or firm) over time.
The initial period of work focused on acquiring the types of micro data that can be used to investigate labour market dynamics in each country, drafting research questions and outlines of the research to be conducted in each country, and producing and presenting preliminary results to other members of the project. We have now moved into a second phase which focuses on the analysis of the data and the production of the research papers and reports.
The next stage of the project aims to improve the drafts of the papers presented in March 2013 into a form which can be made public, to continue to compile the data from each country and the results into a comparable paper and to work on presenting the results in a form which is accessible to policy makers.
The Research Problem
Over the period 2008 to 2010, during the global financial crisis, the International Labour Organisation (ILO) estimates that joblessness among young people (aged 15-25) increased by seven percentage points – the largest two year increase on record for countries which they have data. More broadly, the ILO estimates in 2010 that 8 million new jobs are still needed to return to pre-crisis levels in emerging and developing countries (International Labour Office, 2010).
Across the world young people have suffered a disproportionate increase in unemployment. In many countries few jobs have been created and since the youth are the group entering the labour market they have suffered. In addition to this, young people have less experience and lower productivity levels and thus are more likely to be dismissed. High levels of youth unemployment are problematic for a number of reasons. Young people, who spend time in inactivity, rather than school or work, are likely to deskill and may develop social problems which reinforce their exclusion from the labour market. They also form a volatile political constituency. In addition to this, young people are at the start of their working lives and early setbacks may influence their life-time work trajectories. There are also other vulnerable groups that may be disproportionally affected by crises. These include women and those on the margins of the labour market, including the self-employed.
The recent financial crisis is not the only type of crisis that African countries have faced recently. Civil war, such has occurred recently in C?te d’Ivoire or civil unrest which continues to threaten countries such as Uganda are examples of one type of crisis. Political unrest, such as that following the 2007 Kenyan elections or the 2009 protests in Madagascar which led to a change in president, are another.
In order for policy makers to design interventions that can help to reduce the impact of crises on employment, it is essential to know how various types of crises impact at the micro-level. This project provides insight into labour market dynamics, including how the impact on firms and thus labour demand, during periods of crisis, for a number of sub-Saharan African countries.
Collaborating institutions
African Micro-Economic Research Unit, University of the Witwatersrand
University of Yaounde II
University of Ghana
University of Nottingham
University of Nairobi
INSTAT - Madagascar
Stellenbosch University
African Development Bank
University of Dar es Salaam
Makerere University
Economic Policy Research Centre
CSAE, University of Oxford
Research Outputs
Click here to read the Policy Brief:
Labour Market Dynamics in Times of Crisis Policy Brief.pdf
Click here to read the Overview of Research Findings:
Ghana
The paper analyses labour market participation and selection into specific employment sectors in urban areas of Ghana and Tanzania using urban worker survey data from 2004 to 2006 in pooled sample models. A baseline participation model and multinomial logit model of occupational choice is applied. Results from the baseline models suggest determinants of participation differ across the two countries pointing out the heterogeneity in the two labour markets. Specifically in Tanzania, education is found to increase the probability of employment but the reverse is the case in Ghana as education increases the probability of not-working (unemployment). In terms of selection into specific sectors, the results suggest both labour markets are characteristic of a preference for formal sector employment by the highly educated as all levels of education are found to monotonically increase the probability of public and private (formal) sector employment and decrease the probability of selfemployment (informal sector). Among age cohorts, young people face more challenges in accessing formal sector jobs in both countries compared to older people.
Click here for the full paper:
Twumasi Baffour Selection into employment sectors.pdf
Rwanda
Despite the intuitive notion that employment matters for poverty reduction, there is insufficient empirical research in this area in Rwanda. While there is a broad consensus that not all growth spells have the same impact on employment and poverty, there have been relatively few attempts to systematically unpack the relationship between economic growth, employment and poverty reduction in Rwanda. The purpose of this study is to examine the links between growth , employment and productivity in order advise government on which sectors have a higher potential to generate productive off-farm farm jobs that will drive a higher proportion of the population out of poverty. In this study, we use a three step framework to determine the main mechanisms through which economic growth translates into poverty reduction and job creation in in Rwanda. We decompose changes in GDP and attribute to each component (employment, output per worker, capital and TFP) to each sector as a share of total observed growth. The methodology uses Shapley decompositions, which is a simple additive method that links changes in a particular component to changes in total per capita GDP, by taking into account the relative size of the sector or component, as well as the magnitude of the change. The aim of this methodology is to understand how growth is linked to changes in employment, output per worker and population structure at the aggregate level and by sectors. In order to draw the profile of Rwanda's growth we disentangle the sources of output per worker growth: either Total Factor Productivity (TFP) growth, movements of employment from one sector to another, or changes in the capital-labor ratio. This framework enables us to determine: first, the extent to which growth is associated with changes in employment (the quantity of jobs) or productivity (the quality of jobs) by sector of the economy . It also enables to determine how employment and productivity changes have been is distributed among the different sectors of Rwanda's Economy over time in order to understand how inclusive the observed growth in Rwanda has been over time.
Click here for the full paper:
Malunda Employment inetensity of growth in Rwanda 2014.pdf
Tanzania
The paper examines the role of education in earnings determination by using all three rounds of the Urban Worker Surveys of Tanzania and Ghana for 2004-2006. We investigate and compare heterogeneity in earnings determinants among self-employed (informal), private and public sector workers. We examine the role education, individual and household characteristics play in facilitating entry into employment sectors in addition to analysing the pattern of returns to education along the earnings distribution. After addressing endogeneity and selectivity biases associated with estimating earnings equations, we find that education plays an important role in promoting access to formal sector jobs, particularly employment in the public sector, but has no direct impact on earnings within the sector in both countries. Results from quantile regressions indicate primary and secondary levels of education are inequality-reducing among workers in Tanzania but this is not the case in Ghana. Tertiary education on the other hand is found to widen earnings inequality in both Tanzania and Ghana.
Click here for the full paper:
Twumasi Baffour determinants of urban worker earnings.pdf
Madagascar
Madagascar has experienced four socio-political crises since 1960, the two most recent being in 2002 and 2009. These crises have affected the economy and particularly the labour market, and have thus also affected poverty levels. This paper uses data from the city of Antananarivo to examine the impacts of the two most recent crises on labour market outcomes. Both crises had a larger effect on those most marginalised in the labour market namely women, the youth, and the low-skilled. These crises also had a particular impact on employment in the EPZ. In 2002, two out of three people who had lost jobs were women and in 2010 this figure rose to nine out of ten. Low-skilled workers, specifically individuals with low education had lost the most jobs after each crisis. Firms in EPZ were primarily affected by job losses over the periods 2009-2010 and 2001-2002. The informal sector was the only one which experienced net job creation, as a significant number of those who had lost formal sector jobs transitioned into the informal sector. These results indicate that crises of this nature impact the most vulnerable, and provide further motivation for efforts to resolve these crises as quickly as possible.
Click here for the full paper:
Economic crisis in Madagascar Final edit.pdf
Cameroon
This paper examines the response of Cameroonian manufacturing firms to exposure to international trade through reductions in tariff rates, import penetration, exports, and foreign ownership. We find that the probability of firm death declines with import penetration, exports and size while exiters are more likely to be foreign owned. Survival probability decreases with tariff cuts, particularly for least productive firms. We also find that import penetration is a source of skill-biased technological change and this result holds at the industry level. The importance of exports and foreign ownership could not be clearly established. Firms in industries with relatively greater tariff cuts experience large demand for unskilled workers. Firm size positively affects the demand for both skilled and unskilled workers, skill intensity induces skill acquisition while capital-and skill-intensities decrease skill downgrading.
Click here for the full paper:
Njikam and Manfred Trade foreign ownership and labour demand in Cameroon 2014.p
Uganda
Wars and civil conflicts, and their associated displacement of individuals, have substantial destructive impacts and are extremely disruptive to the livelihoods of those affected. Given the large number of displaced people worldwide and the major changes associated with displacement and resettlement, the transition from Internally Displaced People’s (IDP) camps home and the determinants of livelihoods in this setting are crucial for guiding appropriate policy responses. This paper investigates the labor market changes associated with displacement and resettlement from Internally Displaced Peoples camps in Northern Uganda. In 2005, 911 households who were living in 32 IDP camps in Northern Uganda were sampled and interviewed. These households were re-interviewed in 2007 during a period of transition and resettlement in the region. At that time, some sample households had already relocated home, while others were in temporary satellite camps, and others remained in one of the original IDP camps. These households were interviewed again in 2011, several years after resettlement. Therefore, the panel dataset contains information from households while they were displaced, during the transition home, post-resettlement, as well as recall data from before displacement. The findings suggest that unemployment remains high amongst formerly displaced individuals at a level similar to what it was in 2005 during displacement. The paper also finds differential impacts of conflict and displacement on labor market participation by gender.
Click here for the full paper:
LehrerPostConflictLivelihoods.pdf
Swaziland
1) Swaziland faces a major youth employment challenge, as evidenced by the highest youth unemployment rate in Africa and widespread youth idleness. Utilizing the first two (2007 and 2010) Swaziland labor force surveys, we illustrate the youth labor market disadvantage, suggesting that policies need to focus on the demand side of the labor market. The evidence from focus group discussions with young Swazi entrepreneurs points to numerous constraints to youth business start-ups, with the lack of entrepreneurial skills and start-up capital as key. To reflect these facts, we develop a model where due to the lack of skills young entrepreneurs have difficulties to turn their ideas into businesses and analyze policies such as training and start-up subsidies. Measures to narrow entrepreneurial activity gaps between youth and adults are also examined. The paper concludes with international experiences on successful youth entrepreneurship policies that could inform design of such interventions in Swaziland.
Click here for the full paper:
Brixiova Kangoye and Fakudze youth employmnet entrepreneurship Swaziland 2013.pd
2) This paper documents the main gender disparities in the Swazi labor market and suggests mitigating policies. Based on the first two (2007 and 2010) Swaziland Labor Force Surveys, we found several indicators of female labor market disadvantages. For example, relative to men, women are disproportionally impacted by unemployment and more often discouraged from the labor force participation. While we identified only small (adjusted) gender wage gap, women may be facing entry barriers to high paying professions, including in the public sector. Regarding the disparities in entrepreneurship opportunities, the Heckman probit selection model suggests that even though more women than men are self-employed, they are over-represented in low-productive activities. Due to limited asset ownership, especially of land, they rely mostly on informal finance sources. The paper concludes with policy recommendations that could help women in Swaziland -- and other middle income countries in Southern Africa -- overcome these disadvantages.
Click here for the full paper:
Brixiova and Kangoye Gender gap labor market Swaziland 2013.pdf