## South Africa: Labor Market Dynamics and Inequality

_IMF Working Papers, July 11, 2016_

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## Bibliographic details
- Authors: Rahul Anand, Siddharth Kothari, Naresh Kumar
- Published: July 11, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781498358934.001

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### Main findings
- The paper analyzes determinants of high unemployment in South Africa using individual level panel data from the Quarterly Labor Force Survey.
- Prior work experience and gender are important determinants of the job-finding rate.
- Education attainment and race are important determinants of the job-exit rate.
- Using stock-flow equations, counterfactual exercises quantify the role of different transition rates on unemployment.
- The paper explores the contribution of unemployment to inequality.
- A 10 percentage point reduction in unemployment lowers the Gini coefficient by 3 percent.
- Achieving a similar reduction in inequality solely through transfers would require a 40 percent increase in government transfers.

### Methodology and analysis
- Data source: Individual level panel data from the Quarterly Labor Force Survey.
- Analytical approach: Estimation of job-finding and job-exit determinants; use of stock-flow equations and counterfactual exercises to quantify impacts of transition rates on unemployment.

### Policy-relevant implications
- Reducing unemployment is important for reducing inequality, as indicated by the estimated effects on the Gini coefficient.
- Relying solely on transfers to achieve the same inequality reduction would imply a substantially larger fiscal effort (a 40 percent increase in government transfers) compared with lowering unemployment directly.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/south-africa-labor-market-dynamics-and-inequality-44078_