Former Homeland Areas and Unemployment in South Africa: A Decomposition Approach

27 Pages Posted: 10 Feb 2020

See all articles by Prudence Magejo

Prudence Magejo

University of the Witwatersrand

Miracle Ntuli

University of Cape Town (UCT)

Gibson Mudiriza

University of Cape Town (UCT)

Abstract

This study estimates and decomposes the unemployment rate gap between former and non-former homeland areas in South Africa. We apply the Oaxaca-Blinder (1973) decomposition technique to the 2011 population census community profiles at main place level to identify the factors underpinning observed spatial patterns in unemployment. Results indicate that former homeland areas suffer from relatively higher rates of unemployment compared to non-former homeland areas. The 24%-point difference is primarily explained by differences in endowments. If main-place observed characteristics are equalised between former and non-former homeland areas, the unemployment gap can be reduced by as much as 80%. Factors driving the endowment effect are area compositional differences in age, gender, race, marital status and education. While the bulk of these factors are structural in nature, interventions that improve education attainment in former homeland areas and those that are sensitive to the challenges faced by black South African youth and women in the labour market will contribute immensely towards alleviating the spatial gap.

Keywords: unemployment, former homeland area, decomposition and South Africa

JEL Classification: N37, J01

Suggested Citation

Magejo, Prudence and Ntuli, Miracle and Mudiriza, Gibson, Former Homeland Areas and Unemployment in South Africa: A Decomposition Approach. IZA Discussion Paper No. 12941, Available at SSRN: https://ssrn.com/abstract=3534489

Prudence Magejo (Contact Author)

University of the Witwatersrand ( email )

1 Jan Smuts Avenue
Johannesburg, GA Gauteng 2000
South Africa

Miracle Ntuli

University of Cape Town (UCT) ( email )

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

Gibson Mudiriza

University of Cape Town (UCT)

Private Bag X3
Rondebosch, Western Cape 7701
South Africa

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