Does Education Pay In South Africa? Estimating Returns To Education Using Two Stage Least Squares Approach

This paper investigates, using the first three waves of the National Income Dynamic dataset, the link between education and wages. Specifically it estimates the potential impact of the educational levels on wages in South Africa over the period 2008 – 2012.  A two-stage least squares (2SLS) method is applied to account for endogeneity bias. More specifically, we use a lagged education as an instrumental variable in a two-stage least squares framework. Our results show that the proposed instruments is relevant and that there is an unambiguously positive effect on the wages of an individual from participation in education.

Determinants of savings in urban and rural households : Case of south Africa

Abstract: Please refer to full text to view abstrac

Socio-Economic Status of Households and the Determinants of Asset Poverty: A Case of South Africa

When measuring poverty in South Africa, much of the theoretical and empirical work has focused on money-metric measures of poverty. The conventional approach has been the use of a poverty line sufficient to meet primary human needs, often derived from consumption, expenditure or income levels. This narrow perspective has tended to divert the attention of development economists towards the pursuit of income growth, which has been associated with development and a necessary condition for poverty reduction. However, with a changing emphasis on development, the model, analytical methods, and related frameworks have been subjected to critical scrutiny by populists and neoliberals alike. The purpose of this study is to contribute to the existing literature by using an alternative approach ─ a non-monetary approach to the measurement of poverty in South Africa. To the best of our knowledge, this is the first study in South Africa to compute an asset poverty index using principal component analysis in a panel setting and use appropriate panel data models to investigate the key determinants of asset poverty. We used data drawn from the existing five waves of the National Income Dynamic Study. Using the random effect probit model, we found that some factors, such as levels of education of the head of household (primary, secondary, matric and tertiary) and land ownership, have a reducing influence on asset poverty. Factors The results also revealed that household size and unemployed people are more prone in South Africa

Do social grants displace remittances? evidence from South Africa

Abstract: This paper employs a newly-available and representative National Income Dynamics Study (NIDS) data of South African households to investigate whether social grants crowd-out or displace remittances. The estimated results based on full sample reveal that while the social grants have a negative impact on the amount of remittances received, the effect is statistically insignificant – social grants do not crowd out or displace remittances. The coefficient on the social grant is also insignificant in both sub-samples (rural and urban), consistent with the results on the full sampl

The Determinants Of Household Savings In South Africa: A Panel Data Approach

This study employs panel data estimation models to investigate the determinants of household savings in South Africa over the period 2008 – 2012. The novelty of some panel data models is their power to overcome the problems of endogeneity bias, in addition to controlling for unobserved heterogeneity across households. The study used the three waves of the new unique and rich first national representative longitudinal survey, the National Income Dynamics Study (NIDS), which tracks changes in individuals’ livelihoods over time. The distinctiveness of NIDS data is that it is available in a panel format and can be used to investigate the structure and impact of different aspects of socio-economic factors on household savings. The results of this study reveal that household savings in South Africa are strongly driven by income, age structure, education achievement and employment status. Yet the causal nexus between savings and the household size was found to be negative, a sign that larger families compromise households savings prospects.

An Empirical Analysis of the Determinants of poverty and household welfare in South Africa

The data used for our analysis is drawn from the first four waves of the National Income Dynamic Study to determine the factors that influence poverty and household welfare in South Africa. Contrary to most existing studies, which have applied ordinary least squares and probit/logit models on cross-sectional data, this analysis captures unobserved individual heterogeneity and endogeneity, both via fixed effect, and via a robust alternative based on random effect probit estimation. The results from fixed effect and random effect probit indicate that levels of education of the household head, some province dummies, race of the household head, dependency ratio, gender of the household head, employment status of the household head and marital status of the household head are statistically significant determinants of household welfare. Consistent with previous research, we also found that, compared to traditional rural areas (used as reference category), households living in urban and farms are less likely to be poverty stricken, which implies that rural areas (traditional rural areas) should continue to be a major focus of poverty alleviation efforts in South Africa

An Empirical Analysis of the Determinants of poverty and household welfare in South Africa

The data used for our analysis is drawn from the first four waves of the National Income Dynamic Study to determine the factors that influence poverty and household welfare in South Africa. Contrary to most existing studies, which have applied ordinary least squares and probit/logit models on cross-sectional data, this analysis captures unobserved individual heterogeneity and endogeneity, both via fixed effect, and via a robust alternative based on random effect probit estimation. The results from fixed effect and random effect probit indicate that levels of education of the household head, some province dummies, race of the household head, dependency ratio, gender of the household head, employment status of the household head and marital status of the household head are statistically significant determinants of household welfare. Consistent with previous research, we also found that, compared to traditional rural areas (used as reference category), households living in urban and farms are less likely to be poverty stricken, which implies that rural areas (traditional rural areas) should continue to be a major focus of poverty alleviation efforts in South Africa

The impact of regulation on small businesses in the Republic of South Africa

M.Comm.The study examines the impact of regulations on small businesses in the Republic of South Africa. It analyses the Small Business Development Policy of 1996 which categorised small businesses into micro, small, very small, and medium enterprises (SMMEs). This policy outlines the functions of the large number of small business support institutions such as Ntsika Enterprise Promotion Agency, Khula Finance, the Department of Trade and Industry (DTI) institutions and the Gauteng Provincial SMME desks. Ntsika was formed in 1996 to implement the small business strategy. The institution provides non-financial support to small businesses through a number of programmes. These programmes include Tender Advise Centres and Manufacturing Centres. Khula Enterprise Promotion Agency was established in 1996 to provide loans and guarantees to small businesses in order to increase their access to finance through commercial banks. Khula manages a large number of programmes, namely, business loan schemes, guarantee schemes, Khula star funds and equity funds. The DTI provides a number of incentive schemes for registered small businesses. The DTI incentive schemes provide the necessary infrastructure and contribute towards increasing the performance in the small businesses sector. Small businesses face a large number of challenges such as the lack of competent human capital, low profit margins, inadequate financing, stiff competition from large monopolistic and well established businesses, inadequate marketing strategies, unfavourable policy and legal environment, lack of information about government support initiatives, and cyclical sensitivity of their products. The study concludes that there is a need for mentorship programmes in the small business sector in order to increase the success rate. More research is needed in the small business sector to create awareness about potential benefits accruing to the financial sector and the economy as a whole. More players are required in the commercial banking sector in order to enhance competition. The state should reduce barriers to entry into the banking and the SMME sector. Furthermore, the state should level the playing field to facilitate access of women to financial resources. These institutions must publish all their results regularly so that the success of their financing can be evaluated. Transparency is needed and non-performing loans must be reported to judge the small business support institutions

Tracing environmental Kuznets curves: unveiling the interplay of inequality, urbanization, GDP and emissions in BRICS nations

In light of environmental challenges, the BRICS countries have stepped to the forefront of economic progress versus environmental sustainability debate. Not only has energy consumption increased rapidly in these countries, but the economic progress and urbanization, mainly driven by intensive fossil fuel production, have also led to higher levels of income inequality. The dynamics of the interplay between economic growth, urbanization, and income inequality on the one hand and environmental sustainability on the other have yet to be fully understood in the BRICS context. This paper aims to contribute to the ongoing debate by assessing a combination of three Environmental Kuznets Curves (EKC) based on the GDPpc-emissions nexus, the income inequality- emissions nexus, and the urbanization-emissions nexus. Using the Autoregressive Distributed Lag (ADRL) and Panel Fully Modified Least Squares (FMOLS) models, we find an inverted U-shape EKC between GDP and carbon emissions, an inverted U-shaped EKC between income inequality and carbon emissions, and a U-shaped EKC between urbanization and carbon emissions. The inverted EKC between GDPpc and carbon emissions suggests that in the long run sustainable carbon reduction is possible alongside economic growth, but urbanization’s U-shaped impact on emissions might hinder this. Moreover, the inverted U-shaped relationship between income inequality and carbon emissions indicates a potential long-run trade-off between reducing both inequality and carbon emissions. Factors behind this relationship may vary significantly and include institutions- and country-specific factors, yet policymakers in the BRICS countries will do well attempting to better understand the dynamics behind urbanization and inequality as it will enable them to adopt more effective holistic policies aiming to improve energy efficiency, reduce fossil fuel dependence, and build economic systems contributing to faster economic growth, lower inequality and greater environmental sustainability