More than a quarter century after implementing fiscal rules, and despite extensions of the convergence phase, West African Economic and Monetary Union (WAEMU) countries are still unable to comply with the fiscal rules established. In addition, these countries are facing multiple shocks, exerting pressure on public finances. Based on this context, this paper empirically investigates the drivers of fiscal rules policy credibility of seven WAEMU countries over the period 1994–2019. Using two measures of fiscal rules policy credibility and pooled mean group (PMG) econometric estimator of dynamic panel, we find that internal and external macroeconomic variables are the main determinants of fiscal rules policy credibility in WAEMU countries in the long run. The institutional and political variables have mitigated effects. Specifically, we find that debt accumulation, economic activity fluctuation (gross domestic product), fiscal space reduction, and international commodity price fluctuation harm fiscal rules policy credibility, meaning that these variables deviate the fiscal policy from its target value. Our results suggest that WAEMU governments should pay attention to global shocks to reduce their macroeconomic vulnerabilities and better manage their economic resilience. In addition, they should better manage debt by allocating it to productive sectors, or improve the quality of institutions by establishing a genuine democracy that improves decision‐making and reduces deviant behaviour.
{"title":"Determinants of fiscal rules policy credibility in West African Economic and Monetary Union countries","authors":"Dakpoulé Da, Mahamadou Diarra","doi":"10.1111/saje.12384","DOIUrl":"https://doi.org/10.1111/saje.12384","url":null,"abstract":"More than a quarter century after implementing fiscal rules, and despite extensions of the convergence phase, West African Economic and Monetary Union (WAEMU) countries are still unable to comply with the fiscal rules established. In addition, these countries are facing multiple shocks, exerting pressure on public finances. Based on this context, this paper empirically investigates the drivers of fiscal rules policy credibility of seven WAEMU countries over the period 1994–2019. Using two measures of fiscal rules policy credibility and pooled mean group (PMG) econometric estimator of dynamic panel, we find that internal and external macroeconomic variables are the main determinants of fiscal rules policy credibility in WAEMU countries in the long run. The institutional and political variables have mitigated effects. Specifically, we find that debt accumulation, economic activity fluctuation (gross domestic product), fiscal space reduction, and international commodity price fluctuation harm fiscal rules policy credibility, meaning that these variables deviate the fiscal policy from its target value. Our results suggest that WAEMU governments should pay attention to global shocks to reduce their macroeconomic vulnerabilities and better manage their economic resilience. In addition, they should better manage debt by allocating it to productive sectors, or improve the quality of institutions by establishing a genuine democracy that improves decision‐making and reduces deviant behaviour.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"43 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141745286","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Tuberculosis (TB) is one of the leading causes of death from an infectious disease, but its micro‐economic impacts on labour market participation remain poorly understood. We analyse the relationship between TB and employment outcomes in South Africa, one of the countries with the highest TB disease burden worldwide, using individual‐level panel data from 2008 to 2017. Applying a coarsened exact matching methodology, we find that contracting TB entails a 5% lower probability of entering the formal labour market. Moreover, TB and its associated employment changes go hand in hand with corresponding reductions in individual income but not in household income and expenditure.
{"title":"Tuberculosis and labour market participation: Evidence from South Africa","authors":"Helena Ting, Martina Bozzola, Chiara Ravetti","doi":"10.1111/saje.12385","DOIUrl":"https://doi.org/10.1111/saje.12385","url":null,"abstract":"Tuberculosis (TB) is one of the leading causes of death from an infectious disease, but its micro‐economic impacts on labour market participation remain poorly understood. We analyse the relationship between TB and employment outcomes in South Africa, one of the countries with the highest TB disease burden worldwide, using individual‐level panel data from 2008 to 2017. Applying a coarsened exact matching methodology, we find that contracting TB entails a 5% lower probability of entering the formal labour market. Moreover, TB and its associated employment changes go hand in hand with corresponding reductions in individual income but not in household income and expenditure.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"13 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-07-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141745289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although the effect of fiscal drag is well‐studied in the industrialised world, empirical evidence from developing economies remains limited. Against this backdrop, this study aims to explore the effect of fiscal drag on income distribution and work incentives. To this end, the study employs SOUTHMOD, the tax‐benefit microsimulation model, for six African countries: Ethiopia, South Africa, Tanzania, Uganda, Mozambique, and Zambia. Three important conclusions are drawn from our empirical investigation. First, in the absence of proper tax parameter adjustment, the distribution of fiscal drag is determined by the liability progression of personal income tax in the pre‐inflation period. Second, the impact of fiscal drag on the redistributive effects and progressivity of personal income taxes is differentiated among countries. On the one hand, it reduces the progressivity of personal income tax in Ethiopia, South Africa, Tanzania, Uganda, and Zambia; on the other hand, it improves progressivity in Mozambique. However, it decreases the redistributive effect of personal income tax only in Ethiopia, Tanzania, and Uganda. Third, fiscal drag reduces financial work incentives to increase earnings in all countries. Addressing fiscal drag becomes very crucial considering the soaring inflation due to the war between Ukraine and Russia.
{"title":"The effect of fiscal drag on income distribution and work incentives: A microsimulation analysis on selected African countries","authors":"Adnan Abdulaziz Shahir, Francesco Figari","doi":"10.1111/saje.12375","DOIUrl":"https://doi.org/10.1111/saje.12375","url":null,"abstract":"Although the effect of fiscal drag is well‐studied in the industrialised world, empirical evidence from developing economies remains limited. Against this backdrop, this study aims to explore the effect of fiscal drag on income distribution and work incentives. To this end, the study employs SOUTHMOD, the tax‐benefit microsimulation model, for six African countries: Ethiopia, South Africa, Tanzania, Uganda, Mozambique, and Zambia. Three important conclusions are drawn from our empirical investigation. First, in the absence of proper tax parameter adjustment, the distribution of fiscal drag is determined by the liability progression of personal income tax in the pre‐inflation period. Second, the impact of fiscal drag on the redistributive effects and progressivity of personal income taxes is differentiated among countries. On the one hand, it reduces the progressivity of personal income tax in Ethiopia, South Africa, Tanzania, Uganda, and Zambia; on the other hand, it improves progressivity in Mozambique. However, it decreases the redistributive effect of personal income tax only in Ethiopia, Tanzania, and Uganda. Third, fiscal drag reduces financial work incentives to increase earnings in all countries. Addressing fiscal drag becomes very crucial considering the soaring inflation due to the war between Ukraine and Russia.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"16 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140803814","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Poverty among widows has received little empirical attention in Africa despite women's severe vulnerability to death shock. We provided empirical evidence on widow households' transition in and out of poverty and factors influencing their probability of being in poverty. The Markov transition probabilities show moderate but increasing positive transitions for severely poor widows. Non‐poor widows are stayers who primarily sustain their non‐poor class. The ordered logit estimation shows that higher dependency ratio increases the chances of a widow being severely poor. Being an older widow and having literacy skills reduced the probability that a widow household will be severely poor. Household size and dependency ratio are noted to play important roles in the probability of transitions across poverty classes as shown by the estimated multinomial logit model. These findings are robust to alternative poverty measure, estimation method and different set of weights. Generally, the results echo the need for social safety nets to cushion widows' financial strains. Life insurance policy for spouses, increased sensitization of widows of their rights and adult education programmes targeted at widows could mitigate the negative impact of widowhood on women.
{"title":"Widowhood and multidimensional poverty: Evidence from Nigeria","authors":"Taiwo Aderemi, Joseph Ogebe","doi":"10.1111/saje.12376","DOIUrl":"https://doi.org/10.1111/saje.12376","url":null,"abstract":"Poverty among widows has received little empirical attention in Africa despite women's severe vulnerability to death shock. We provided empirical evidence on widow households' transition in and out of poverty and factors influencing their probability of being in poverty. The Markov transition probabilities show moderate but increasing positive transitions for severely poor widows. Non‐poor widows are stayers who primarily sustain their non‐poor class. The ordered logit estimation shows that higher dependency ratio increases the chances of a widow being severely poor. Being an older widow and having literacy skills reduced the probability that a widow household will be severely poor. Household size and dependency ratio are noted to play important roles in the probability of transitions across poverty classes as shown by the estimated multinomial logit model. These findings are robust to alternative poverty measure, estimation method and different set of weights. Generally, the results echo the need for social safety nets to cushion widows' financial strains. Life insurance policy for spouses, increased sensitization of widows of their rights and adult education programmes targeted at widows could mitigate the negative impact of widowhood on women.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"6 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-04-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140629788","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Victor Nechifor, Ole Boysen, Emanuele Ferrari, Kidanemariam Hailu, Mohammed Beshir
The study assesses the implications of the COVID‐19 pandemic and the government responses for the economic performance and poverty incidence in Ethiopia for the fiscal years of 2019/20 and 2020/21. It accounts for the impacts of the pandemic on factor productivity, trade costs, export demand, tourism, remittances and foreign direct investment (FDI). An economy‐wide multi‐sectoral model determines impacts at macroeconomic, sectoral, and household levels. A poverty analysis module characterises the effects of the pandemic on food poverty headcount, gap, and severity. Results show that the COVID‐19 impacts could have been significant across all macroeconomic metrics had the government not intervened through fiscal and spending measures. However, much of the recovery through government intervention was driven by agricultural and food processing sectors while output in manufacturing, construction and services sectors continued to be negatively affected. Without government intervention, the food poverty headcount would have increased by about five percentage points. The government measures have mitigated that effect allowing food poverty to reach pre‐COVID‐19 values in 2020/21. Nevertheless, with all measures combined, poor urban households may have been left behind and would require more targeted support to compensate for a significant loss of income.
{"title":"COVID‐19 pandemic in Ethiopia: Socioeconomic impacts and government recovery measures","authors":"Victor Nechifor, Ole Boysen, Emanuele Ferrari, Kidanemariam Hailu, Mohammed Beshir","doi":"10.1111/saje.12374","DOIUrl":"https://doi.org/10.1111/saje.12374","url":null,"abstract":"The study assesses the implications of the COVID‐19 pandemic and the government responses for the economic performance and poverty incidence in Ethiopia for the fiscal years of 2019/20 and 2020/21. It accounts for the impacts of the pandemic on factor productivity, trade costs, export demand, tourism, remittances and foreign direct investment (FDI). An economy‐wide multi‐sectoral model determines impacts at macroeconomic, sectoral, and household levels. A poverty analysis module characterises the effects of the pandemic on food poverty headcount, gap, and severity. Results show that the COVID‐19 impacts could have been significant across all macroeconomic metrics had the government not intervened through fiscal and spending measures. However, much of the recovery through government intervention was driven by agricultural and food processing sectors while output in manufacturing, construction and services sectors continued to be negatively affected. Without government intervention, the food poverty headcount would have increased by about five percentage points. The government measures have mitigated that effect allowing food poverty to reach pre‐COVID‐19 values in 2020/21. Nevertheless, with all measures combined, poor urban households may have been left behind and would require more targeted support to compensate for a significant loss of income.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"8 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-04-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140593576","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper is using the Continuous Wavelet Transform (CWT) and the OLS estimator to examine the relationship between energy prices (coal and gas), inflation and economic growth in Mozambique. Coal and gas are the primary commodity and source of revenue for the country. The research uses quarterly data from 2001 to 2022. Among other results, we found evidence of high coherence between macroeconomic variables (inflation and real GDP growth rate) and energy prices (thermal coal and natural gas prices) only for the frequency intervals between 1.5 and 4 years (short term). The results hold even after controlling for the real GDP growth and exchange rate; we concluded that only in the short term (1.5–4 years), there is high coherence between energy prices and inflation in the time interval between 2004 and 2012. This finding indicates no relation between energy prices, inflation and economic growth in Mozambique. Furthermore, the OLS estimates substantiate the wavelet result, showing no impact. In this context, we can conclude that there is probably a ‘Dutch disease’ or ‘resource curse’ that negates the positive effects of exploiting these resources on short‐ and long‐term economic growth.
{"title":"The impact of energy prices on inflation and economic growth in Mozambique: A wavelet approach and OLS estimator","authors":"Gilmar Fernando Dias da Conceição","doi":"10.1111/saje.12373","DOIUrl":"https://doi.org/10.1111/saje.12373","url":null,"abstract":"The paper is using the Continuous Wavelet Transform (CWT) and the OLS estimator to examine the relationship between energy prices (coal and gas), inflation and economic growth in Mozambique. Coal and gas are the primary commodity and source of revenue for the country. The research uses quarterly data from 2001 to 2022. Among other results, we found evidence of high coherence between macroeconomic variables (inflation and real GDP growth rate) and energy prices (thermal coal and natural gas prices) only for the frequency intervals between 1.5 and 4 years (short term). The results hold even after controlling for the real GDP growth and exchange rate; we concluded that only in the short term (1.5–4 years), there is high coherence between energy prices and inflation in the time interval between 2004 and 2012. This finding indicates no relation between energy prices, inflation and economic growth in Mozambique. Furthermore, the OLS estimates substantiate the wavelet result, showing no impact. In this context, we can conclude that there is probably a ‘Dutch disease’ or ‘resource curse’ that negates the positive effects of exploiting these resources on short‐ and long‐term economic growth.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"101 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140055126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using the World Bank panel enterprise data for Kenya for the period 2007–2013–2018, we examined the role of ISO certification and export intensity in explaining the total factor productivity (TFP) of Kenyan manufacturing firms. Contrary to previous studies that largely focus on export propensity, this paper distinguished between the effects of direct and indirect export intensity. To address the endogeneity problem, we instrumented both direct and indirect export intensity variables with imported input supplies dummy. Further, we controlled for heterogeneity in our models by incorporating the year and industry fixed effects as well as the unobserved time‐varying firm characteristics. We found opposite effects of exporting on TFP. While direct export intensity significantly increased TFP, indirect export intensity significantly curtailed TFP. This suggested that direct exporters vis‐à‐vis indirect exporters were more likely to efficiently exploit the productive capacity of foreign technology and knowledge spillover effects that accrue from learning‐by‐exporting. Second, ISO certification significantly increased TFP for indirect exporting firms only denoting a stronger compensating effect for these intermediary‐dependent exporting enterprises. It also affirmed the need by manufacturing firms to attain Internationally Recognized Quality Certification standards. This will increase the competitiveness of their products, hence boosting their chances of breaking into the international markets.
利用世界银行关于肯尼亚 2007-2013-2018 年期间的面板企业数据，我们研究了 ISO 认证和出口强度在解释肯尼亚制造业企业全要素生产率（TFP）方面的作用。与以往主要关注出口倾向的研究不同，本文区分了直接和间接出口强度的影响。为了解决内生性问题，我们用进口投入品虚拟变量对直接和间接出口强度变量进行了工具化。此外，我们还在模型中加入了年份和行业固定效应以及未观察到的时变企业特征，以控制异质性。我们发现出口对全要素生产率的影响正好相反。直接出口强度明显提高了全要素生产率，而间接出口强度则明显降低了全要素生产率。这表明，与间接出口商相比，直接出口商更有可能有效利用外国技术的生产能力以及通过出口学习产生的知识溢出效应。其次，ISO 认证大大提高了间接出口企业的全要素生产率，这表明对这些依赖中间商的出口企业具有更强的补偿效应。这也肯定了制造企业获得国际公认质量认证标准的必要性。这将提高其产品的竞争力，从而增加打入国际市场的机会。
{"title":"Total factor productivity in Kenyan manufacturing firms: The role of ISO certification and direct vs indirect export intensity","authors":"Cyprian Amutabi","doi":"10.1111/saje.12372","DOIUrl":"https://doi.org/10.1111/saje.12372","url":null,"abstract":"Using the World Bank panel enterprise data for Kenya for the period 2007–2013–2018, we examined the role of ISO certification and export intensity in explaining the total factor productivity (TFP) of Kenyan manufacturing firms. Contrary to previous studies that largely focus on export propensity, this paper distinguished between the effects of direct and indirect export intensity. To address the endogeneity problem, we instrumented both direct and indirect export intensity variables with imported input supplies dummy. Further, we controlled for heterogeneity in our models by incorporating the year and industry fixed effects as well as the unobserved time‐varying firm characteristics. We found opposite effects of exporting on TFP. While direct export intensity significantly increased TFP, indirect export intensity significantly curtailed TFP. This suggested that direct exporters vis‐à‐vis indirect exporters were more likely to efficiently exploit the productive capacity of foreign technology and knowledge spillover effects that accrue from learning‐by‐exporting. Second, ISO certification significantly increased TFP for indirect exporting firms only denoting a stronger compensating effect for these intermediary‐dependent exporting enterprises. It also affirmed the need by manufacturing firms to attain Internationally Recognized Quality Certification standards. This will increase the competitiveness of their products, hence boosting their chances of breaking into the international markets.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"174 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139947029","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
David de Villiers, Hylton Hollander, Dawie van Lill
Against the backdrop of a proliferation of policy tools in recent years, there is ongoing policy uncertainty surrounding the suitability of capital flow management in mitigating systemic risk and financial disruptions. We study the effectiveness of macroprudential policies in managing extreme capital flow episodes (surges, stops, flight, and retrenchment), comparing them to capital controls and foreign exchange interventions. Using propensity score matching, based on a panel of 54 countries spanning 1990Q1 to 2020Q3, we find that macroprudential policy can reduce the likelihood of extreme capital flow episodes at least as effectively as capital controls or foreign exchange interventions. Their relative effectiveness, however, varies considerably across type of instrument, proliferation of tools, country income-development level, and type of extreme capital flow episode.
{"title":"The effectiveness of macroprudential policies in managing extreme capital flow episodes","authors":"David de Villiers, Hylton Hollander, Dawie van Lill","doi":"10.1111/saje.12371","DOIUrl":"https://doi.org/10.1111/saje.12371","url":null,"abstract":"Against the backdrop of a proliferation of policy tools in recent years, there is ongoing policy uncertainty surrounding the suitability of capital flow management in mitigating systemic risk and financial disruptions. We study the effectiveness of macroprudential policies in managing extreme capital flow episodes (surges, stops, flight, and retrenchment), comparing them to capital controls and foreign exchange interventions. Using propensity score matching, based on a panel of 54 countries spanning 1990Q1 to 2020Q3, we find that macroprudential policy can reduce the likelihood of extreme capital flow episodes at least as effectively as capital controls or foreign exchange interventions. Their relative effectiveness, however, varies considerably across type of instrument, proliferation of tools, country income-development level, and type of extreme capital flow episode.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"287 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139755370","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Climate change and its consequences pose significant economic and social challenges around the world. Droughts have frequently afflicted South Africa, with the most recent severe drought occurring in 2015/2016. However, there has been little empirical research estimating the impact of climate-related shocks on individual well-being in South Africa. In this paper, we investigate the impact of the 2015/2016 drought on individual welfare. We also examine whether access to assets helps to mitigate the negative effects of climate change-related shocks on individual welfare. For estimating the impact of droughts on individual welfare outcomes, weather data are combined with individual panel data from the National Income Dynamics Study dataset. We use weather data from meteorological satellites to measure the extent of droughts across the country, and we measure individual welfare using real per capita consumption expenditure. Our estimation results show that the 2015/2016 drought had no significant effect on real per capita consumption expenditure in South Africa. We hypothesise that this is due in part to the structure of the labour market, with few people relying on subsistence farming, combined with social grants and remittances being the primary source of income for people at the bottom of the consumption distribution. Using anthropometric measurements as an alternative welfare indicator, we find that children living in drought-affected areas had lower weight-for-height measurements than those living in areas not affected by the drought. The findings imply that when food prices increased as a result of the drought, households may have chosen welfare-costly coping techniques such as reducing the quantity and quality of food consumed while keeping overall expenditure the same.
{"title":"Climate change-related shocks, assets and welfare outcomes in South Africa","authors":"Fabio Andrés Díaz Pabón, Muna Shifa, Vimal Ranchhod, Takwanisa Machemedze","doi":"10.1111/saje.12368","DOIUrl":"https://doi.org/10.1111/saje.12368","url":null,"abstract":"Climate change and its consequences pose significant economic and social challenges around the world. Droughts have frequently afflicted South Africa, with the most recent severe drought occurring in 2015/2016. However, there has been little empirical research estimating the impact of climate-related shocks on individual well-being in South Africa. In this paper, we investigate the impact of the 2015/2016 drought on individual welfare. We also examine whether access to assets helps to mitigate the negative effects of climate change-related shocks on individual welfare. For estimating the impact of droughts on individual welfare outcomes, weather data are combined with individual panel data from the National Income Dynamics Study dataset. We use weather data from meteorological satellites to measure the extent of droughts across the country, and we measure individual welfare using real per capita consumption expenditure. Our estimation results show that the 2015/2016 drought had no significant effect on real per capita consumption expenditure in South Africa. We hypothesise that this is due in part to the structure of the labour market, with few people relying on subsistence farming, combined with social grants and remittances being the primary source of income for people at the bottom of the consumption distribution. Using anthropometric measurements as an alternative welfare indicator, we find that children living in drought-affected areas had lower weight-for-height measurements than those living in areas not affected by the drought. The findings imply that when food prices increased as a result of the drought, households may have chosen welfare-costly coping techniques such as reducing the quantity and quality of food consumed while keeping overall expenditure the same.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"21 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139587133","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jan Horn Van Heerden, Jonathan Mark Horridge, David Suarez-Cuesta
During a lively debate between Haroon Bhorat and Michael Sachs at the University of Pretoria recently, Bhorat pleaded for supply-side measures to alleviate poverty in South Africa, rather than demand-side measures. (The debate took place during a session at the Faculty of Economic and Management Sciences' Inaugural Research Day on 8 September, 2023).Bhorat claimed that the SRD grants could not secure a solution to unemployment in a sustainable manner. In this paper, we use the UPGEM Computable General Equilibrium (CGE) model of the University of Pretoria to test the performance of wage subsidies in South Africa, in comparison to the Social Relief of Distress (SRD) grants of the same expenditure magnitude, and report on the differences between the two policy measures in terms of (i) unemployment alleviation, (ii) poverty alleviation and (iii) economic impact in general.
{"title":"A supply-side alternative for SRD grants in South Africa","authors":"Jan Horn Van Heerden, Jonathan Mark Horridge, David Suarez-Cuesta","doi":"10.1111/saje.12370","DOIUrl":"https://doi.org/10.1111/saje.12370","url":null,"abstract":"During a lively debate between Haroon Bhorat and Michael Sachs at the University of Pretoria recently, Bhorat pleaded for supply-side measures to alleviate poverty in South Africa, rather than demand-side measures. (The debate took place during a session at the Faculty of Economic and Management Sciences' Inaugural Research Day on 8 September, 2023).Bhorat claimed that the SRD grants could not secure a solution to unemployment in a sustainable manner. In this paper, we use the UPGEM Computable General Equilibrium (CGE) model of the University of Pretoria to test the performance of wage subsidies in South Africa, in comparison to the Social Relief of Distress (SRD) grants of the same expenditure magnitude, and report on the differences between the two policy measures in terms of (i) unemployment alleviation, (ii) poverty alleviation and (iii) economic impact in general.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"125 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139587129","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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