Jeanne Terblanche, Dawie van Lill, Hylton Hollander
South Africa continues to face high inequality levels despite its progressive tax and extensive social protection systems. We compare the dynamic impact of fiscal policy on the distribution of incomes, wages and wealth in South Africa from 1993 to 2019. For this purpose, we use a time-varying parameter vector autoregression to estimate the impact of direct tax revenue and total transfer spending on three distinct inequality datasets. The analysis of various dimensions of inequality is the main contribution of the paper as the literature typically focuses on income inequality. A second contribution lies in the incorporation of time-varying effects, which enables the analysis of the changing relationship between fiscal policy and inequality. The results suggest that this relationship is indeed time-varying and that the impact of direct taxes and transfers differs markedly across the inequality dimensions, both in terms of magnitude and sign. Overall, we find that both transfers and direct taxes have not significantly reduced income, wage or wealth inequality in South Africa.
{"title":"Fiscal policy and dimensions of inequality in South Africa: A time-varying coefficient approach","authors":"Jeanne Terblanche, Dawie van Lill, Hylton Hollander","doi":"10.1111/saje.12369","DOIUrl":"https://doi.org/10.1111/saje.12369","url":null,"abstract":"South Africa continues to face high inequality levels despite its progressive tax and extensive social protection systems. We compare the dynamic impact of fiscal policy on the distribution of incomes, wages and wealth in South Africa from 1993 to 2019. For this purpose, we use a time-varying parameter vector autoregression to estimate the impact of direct tax revenue and total transfer spending on three distinct inequality datasets. The analysis of various dimensions of inequality is the main contribution of the paper as the literature typically focuses on income inequality. A second contribution lies in the incorporation of time-varying effects, which enables the analysis of the changing relationship between fiscal policy and inequality. The results suggest that this relationship is indeed time-varying and that the impact of direct taxes and transfers differs markedly across the inequality dimensions, both in terms of magnitude and sign. Overall, we find that both transfers and direct taxes have not significantly reduced income, wage or wealth inequality in South Africa.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"9 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139587237","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 longitudinal, institutional data, we estimate the effects of pandemic-related closures on the academic performance trajectories of undergraduate students at a university in South Africa. Leveraging data from both the 2020 and 2021 academic years, and using difference-in-difference models, we find that performance gains made in 2020 are reversed in 2021, with performance dropping relative to pre-pandemic trends. Moreover, we find a widening achievement gap between students from differing socio-economic backgrounds, suggesting household inequalities played out in student performance differentials to a greater extent in 2021—despite the reopening of campus residences that year. This result persists even when accounting for the fact that dropout rates in 2021 are substantially lower compared with previous years. Together, results suggest that the improvements observed in 2020 did not reflect true learning gains and support hypotheses that a reduction in content taught, increased marker leniency and a reduction in credit loads were likely drivers of improved performance in the 2020 academic year.
{"title":"What goes up must come down? The effect of ‘2020’ on university students' academic performance trajectories","authors":"Emma Whitelaw, Nicola Branson","doi":"10.1111/saje.12367","DOIUrl":"https://doi.org/10.1111/saje.12367","url":null,"abstract":"Using longitudinal, institutional data, we estimate the effects of pandemic-related closures on the academic performance trajectories of undergraduate students at a university in South Africa. Leveraging data from both the 2020 and 2021 academic years, and using difference-in-difference models, we find that performance gains made in 2020 are reversed in 2021, with performance dropping relative to pre-pandemic trends. Moreover, we find a widening achievement gap between students from differing socio-economic backgrounds, suggesting household inequalities played out in student performance differentials to a greater extent in 2021—despite the reopening of campus residences that year. This result persists even when accounting for the fact that dropout rates in 2021 are substantially lower compared with previous years. Together, results suggest that the improvements observed in 2020 did not reflect true learning gains and support hypotheses that a reduction in content taught, increased marker leniency and a reduction in credit loads were likely drivers of improved performance in the 2020 academic year.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"8 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-01-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139499919","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}
An important social development goal is to broaden access, especially equality of access, to arts, culture and heritage. This paper used large, national-level data sets to investigate the equality of access to cultural and creative goods and services in South Africa by calculating an expenditure Gini coefficient for cultural and creative industries. Results showed that the Gini coefficient of expenditure for the cultural and creative industries was higher than for spending overall and rose during the 2009 financial crisis. From 2011 to 2021, cultural expenditure inequality trended upwards, but during the pandemic, it declined, perhaps as a result of an expansion of online access.
{"title":"Cultural consumption and equality of access during economic downturns: The expenditure Gini coefficient for South Africa","authors":"Jen Snowball, Andre Gouws","doi":"10.1111/saje.12365","DOIUrl":"https://doi.org/10.1111/saje.12365","url":null,"abstract":"An important social development goal is to broaden access, especially equality of access, to arts, culture and heritage. This paper used large, national-level data sets to investigate the equality of access to cultural and creative goods and services in South Africa by calculating an expenditure Gini coefficient for cultural and creative industries. Results showed that the Gini coefficient of expenditure for the cultural and creative industries was higher than for spending overall and rose during the 2009 financial crisis. From 2011 to 2021, cultural expenditure inequality trended upwards, but during the pandemic, it declined, perhaps as a result of an expansion of online access.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"66 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2024-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139413760","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}
This paper presents evidence on productivity growth in the South African banking industry in the last 30 years. The productivity measures we construct shed light on whether the development, increased contribution and influence of the banking industry have translated into lower cost of intermediation and improved productivity and efficiency of the banking sector. Our results show that there is no apparent trend in the unit cost of intermediation in the period 1993 to 2019, which is indicative of constant productivity.
{"title":"Measuring the unit cost of financial intermediation in South Africa: A measure of bank productivity","authors":"Keaoleboga Mncube, Nicola Viegi","doi":"10.1111/saje.12364","DOIUrl":"https://doi.org/10.1111/saje.12364","url":null,"abstract":"This paper presents evidence on productivity growth in the South African banking industry in the last 30 years. The productivity measures we construct shed light on whether the development, increased contribution and influence of the banking industry have translated into lower cost of intermediation and improved productivity and efficiency of the banking sector. Our results show that there is no apparent trend in the unit cost of intermediation in the period 1993 to 2019, which is indicative of constant productivity.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"216 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139072378","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}
This paper quantifies the effect of fiscal transfers on the trade-off between social relief and debt accumulation and discusses the economic growth and fiscal implications of different combinations of expanded social support and funding choices. Given South Africa's already high level of public debt, the opportunity to fund a basic income grant through higher debt is limited. Using a general equilibrium model, the paper shows that extending the social relief of distress grant could be fiscally feasible provided taxes rise to fund such a programme. Implementing such a policy would, however, have a contractionary impact on the economy. A larger basic income grant (even at the level of the food poverty line) would threaten fiscal sustainability as it would require large tax increases that would crowd-out consumption and investment. The model results show that sustainably expanding social transfers requires structurally higher growth, which necessitates growth-enhancing reforms that crowd-in the private sector through, for example, relieving the energy constraint, increasing government infrastructure investment and expanding employment programmes.
{"title":"The macroeconomics of establishing a basic income grant in South Africa","authors":"Hylton Hollander, Roy Havemann, Daan Steenkamp","doi":"10.1111/saje.12363","DOIUrl":"https://doi.org/10.1111/saje.12363","url":null,"abstract":"This paper quantifies the effect of fiscal transfers on the trade-off between social relief and debt accumulation and discusses the economic growth and fiscal implications of different combinations of expanded social support and funding choices. Given South Africa's already high level of public debt, the opportunity to fund a basic income grant through higher debt is limited. Using a general equilibrium model, the paper shows that extending the social relief of distress grant could be fiscally feasible provided taxes rise to fund such a programme. Implementing such a policy would, however, have a contractionary impact on the economy. A larger basic income grant (even at the level of the food poverty line) would threaten fiscal sustainability as it would require large tax increases that would crowd-out consumption and investment. The model results show that sustainably expanding social transfers requires structurally higher growth, which necessitates growth-enhancing reforms that crowd-in the private sector through, for example, relieving the energy constraint, increasing government infrastructure investment and expanding employment programmes.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"4 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139070460","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 longitudinal, institutional data, we document the impact of COVID‐19 on undergraduate student retention at public universities in South Africa in 2020. We find that student dropout increased in 2020 for students in years 3–5, with little evidence of a change for those entering their second year of study. These aggregate findings mask significant differences across institutions. Students enrolled in most historically advantaged, traditional institutions, and some comprehensive institutions, were not significantly affected, whereas dropout increased significantly at the University of Fort Hare, Walter Sisulu University and the University of Venda, three historically disadvantaged institutions located in rural areas. No difference in retention is found, however, for students enrolled at the University of Zululand (UZ) or the University of Limpopo (UL), equally resource‐disadvantaged institutions where a majority (over 90%) of students are funded via the National Student Financial Aid Scheme (NSFAS). Furthermore, at institutions where dropout increased, NSFAS‐funded students were typically less impacted than their unfunded peers. Our overall findings accord with growing evidence that COVID‐19‐related changes in the sector differentially impacted students from lower socioeconomic backgrounds. However, they also illustrate that the NSFAS bursary appears to have provided a social safety net during this time. Finally, the example of UZ and the UL provide suggestive evidence that institutional relational aspects not observed in our data are important too. Together, results foreground the complex interplay of factors impacting a student's decision to drop out of or remain in university, highlighting that institutional responses and/or relational context during a crisis like COVID‐19 can positively impact student retention.
{"title":"South African student retention during 2020: Evidence from system‐wide higher education institutional data","authors":"N. Branson, E. Whitelaw","doi":"10.1111/saje.12361","DOIUrl":"https://doi.org/10.1111/saje.12361","url":null,"abstract":"Using longitudinal, institutional data, we document the impact of COVID‐19 on undergraduate student retention at public universities in South Africa in 2020. We find that student dropout increased in 2020 for students in years 3–5, with little evidence of a change for those entering their second year of study. These aggregate findings mask significant differences across institutions. Students enrolled in most historically advantaged, traditional institutions, and some comprehensive institutions, were not significantly affected, whereas dropout increased significantly at the University of Fort Hare, Walter Sisulu University and the University of Venda, three historically disadvantaged institutions located in rural areas. No difference in retention is found, however, for students enrolled at the University of Zululand (UZ) or the University of Limpopo (UL), equally resource‐disadvantaged institutions where a majority (over 90%) of students are funded via the National Student Financial Aid Scheme (NSFAS). Furthermore, at institutions where dropout increased, NSFAS‐funded students were typically less impacted than their unfunded peers. Our overall findings accord with growing evidence that COVID‐19‐related changes in the sector differentially impacted students from lower socioeconomic backgrounds. However, they also illustrate that the NSFAS bursary appears to have provided a social safety net during this time. Finally, the example of UZ and the UL provide suggestive evidence that institutional relational aspects not observed in our data are important too. Together, results foreground the complex interplay of factors impacting a student's decision to drop out of or remain in university, highlighting that institutional responses and/or relational context during a crisis like COVID‐19 can positively impact student retention.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"49 5","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138976330","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}
Despite widespread recognition that assets are important for economic wellbeing and women's empowerment, there is limited research on gender wealth gaps in either developed or developing countries. This is largely due to the lack of individual‐level data on wealth or net worth (i.e. the value of assets less debt). Most surveys that collect information on wealth do so at the household level with only one member responding on behalf of the household, even though most assets and debts are held by individuals. In this paper, we measure the gender wealth gap for South Africa using unique individual‐level data collected in the 2017 National Income Dynamics Survey, a representative household survey covering roughly 22,000 adults. We find that men and women hold different types of assets and debt and that there is a substantial gender gap in the monetary value of their net worth, greater than the gender earnings gap recorded in the same year. In our discussion, we reflect on some of the key challenges in measuring wealth as well as remaining gaps in data collection and research.
{"title":"Measuring the gender wealth gap in South Africa using individual‐level data","authors":"D. Casale, Adeola Oyenubi","doi":"10.1111/saje.12362","DOIUrl":"https://doi.org/10.1111/saje.12362","url":null,"abstract":"Despite widespread recognition that assets are important for economic wellbeing and women's empowerment, there is limited research on gender wealth gaps in either developed or developing countries. This is largely due to the lack of individual‐level data on wealth or net worth (i.e. the value of assets less debt). Most surveys that collect information on wealth do so at the household level with only one member responding on behalf of the household, even though most assets and debts are held by individuals. In this paper, we measure the gender wealth gap for South Africa using unique individual‐level data collected in the 2017 National Income Dynamics Survey, a representative household survey covering roughly 22,000 adults. We find that men and women hold different types of assets and debt and that there is a substantial gender gap in the monetary value of their net worth, greater than the gender earnings gap recorded in the same year. In our discussion, we reflect on some of the key challenges in measuring wealth as well as remaining gaps in data collection and research.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"57 3","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138597728","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}
This paper presents further empirical support for the finding that the impact of inflation and that of policy instruments to manage inflation are not distributed equally across households of different income groups. In particular, the evidence using South African data suggests that monetary policy tightening, which seeks to maintain low and stable inflation, has a relatively modest effect on real consumption of poorer households, who tend to rely on government grants and spend larger shares of income on food stuff, while the reduction in real consumption of wealthier households is much larger. This may be due to the fact that low and stable inflation help maintain the value of government grants and cap food prices both in real terms, and higher interest rates reduce labour income, weaken asset price performance and increase debt service cost.
{"title":"Monetary policy, inflation and distributional impact: South Africa's case","authors":"Ken Miyajima","doi":"10.1111/saje.12358","DOIUrl":"https://doi.org/10.1111/saje.12358","url":null,"abstract":"This paper presents further empirical support for the finding that the impact of inflation and that of policy instruments to manage inflation are not distributed equally across households of different income groups. In particular, the evidence using South African data suggests that monetary policy tightening, which seeks to maintain low and stable inflation, has a relatively modest effect on real consumption of poorer households, who tend to rely on government grants and spend larger shares of income on food stuff, while the reduction in real consumption of wealthier households is much larger. This may be due to the fact that low and stable inflation help maintain the value of government grants and cap food prices both in real terms, and higher interest rates reduce labour income, weaken asset price performance and increase debt service cost.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"51 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138547137","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}
This study estimates the financial cycle for Botswana using the Christiano–Fitzgerald band-pass filter, unobserved components approach and a Markov switching dynamic factor model. Using real credit and equity prices, together with several macroeconomic variables from 2001Q1 to 2021Q4, we find that the domestic financial cycle generally captures movements along the business cycle, with peaks reflecting the cumulative build-up of risks during the boom that ultimately burst, coinciding with periods of financial distress. These findings shed light on the implications of financial fluctuations on domestic financial stability, hence, inform effective calibration of macroprudential tools, while also providing traction for implementation of the recently approved macroprudential policy framework for Botswana.
{"title":"Approximating Botswana's financial cycle: Expanding the macroprudential toolkit","authors":"Leonard Nnete Setshegetso, Mogakolodi Mado","doi":"10.1111/saje.12359","DOIUrl":"https://doi.org/10.1111/saje.12359","url":null,"abstract":"This study estimates the financial cycle for Botswana using the Christiano–Fitzgerald band-pass filter, unobserved components approach and a Markov switching dynamic factor model. Using real credit and equity prices, together with several macroeconomic variables from 2001Q1 to 2021Q4, we find that the domestic financial cycle generally captures movements along the business cycle, with peaks reflecting the cumulative build-up of risks during the boom that ultimately burst, coinciding with periods of financial distress. These findings shed light on the implications of financial fluctuations on domestic financial stability, hence, inform effective calibration of macroprudential tools, while also providing traction for implementation of the recently approved macroprudential policy framework for Botswana.","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"77 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138546903","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}
{"title":"ESSA presidential address: The cost of going nowhere slowly*","authors":"Heinrich R. Bohlmann","doi":"10.1111/saje.12360","DOIUrl":"https://doi.org/10.1111/saje.12360","url":null,"abstract":"","PeriodicalId":46929,"journal":{"name":"SOUTH AFRICAN JOURNAL OF ECONOMICS","volume":"60 1","pages":""},"PeriodicalIF":1.3,"publicationDate":"2023-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139223870","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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