Coping with Intra-Household Job Separation in South Africa's Labor Market

80 Pages Posted: 6 Oct 2012

See all articles by Zoe McLaren

Zoe McLaren

University of Michigan at Ann Arbor - School of Public Health

Abstract

In the context of South Africa's pervasive poverty and mass unemployment, households provide an important private safety net for the unemployed. Using new South African Labour Force Survey panel data, I investigate how households cope with job separations and the resulting loss of earned income. Unsurprisingly, I find no evidence of an added worker effect among either men or women. Neither increases in employment or labor market attachment in the year following a household job separation. Instead, households rely on remittances and, to a lesser extent, savings in the wake of a job separation. I find some evidence that households are worse off after a job separation: households reduce expenditures (even in the absence of household composition changes), hold fewer financial assets and are more likely to report frequent food insecurity. Households have viable income replacement strategies to cope with the loss of earned income in the short run, but over the long run job separations are likely to strain these strategies. Addressing structural factors in the labor market that constrain an individual's response to a household shock will enable households to respond more quickly to adverse employment events and limit the long term negative repercussions.

Keywords: employment, participation, added worker effect, pension, South Africa, developing countries

JEL Classification: J22, O15

Suggested Citation

McLaren, Zoe, Coping with Intra-Household Job Separation in South Africa's Labor Market. IZA Discussion Paper No. 6811, Available at SSRN: https://ssrn.com/abstract=2157953

Zoe McLaren (Contact Author)

University of Michigan at Ann Arbor - School of Public Health ( email )

1415 Washington Heights
Ann Arbor, MI 48109-2029
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
20
Abstract Views
387
PlumX Metrics