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Labour Market: Analysis of the NIDS Wave 1 and 2 Datasets

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Paul Cichello; Murray Leibbrandt; Ingrid Woolard (2012). Labour Market: Analysis of the NIDS Wave 1 and 2 Datasets. Discussion Paper 2012/1, presented at 'Towards Carnegie III', University of Cape Town, 3-7 September 2012. Southern Africa Labour and Development Research Unit (SALDRU), University of Cape Town.
Type conference paper
Scope Post-1994 South African economy
Method descriptive quantitative
Period studied 2008–2010
Regions South Africa
Themes labour markets wages, inequality poverty unemployment, methods data sources, transition post apartheid
Citation key cichello2012

Argument

The paper uses the first two waves of the National Income Dynamics Study (NIDS) panel to describe labour market outcomes and transitions for working-age adults between 2008 and 2010. It argues that the panel reveals considerable churning across employment status, employment type, industry and occupation that cross-sections conceal. Women move more in and out of the workforce, while men move more across employment types. Regular employment is shown to be the most stable and rewarding state, since moves into it bring large earnings gains and moves out of it bring losses. The authors also flag three data problems in Wave 2 (the fall in searching unemployment, the drop in subsistence agriculture and the hours-worked variable) and advise caution. The paper is explicitly descriptive and meant to prompt further analysis.

Evidence and method

NIDS Waves 1 (2008) and 2 (2010) nationally representative panel data, restricted to adults aged 20-55 in 2008 with valid interviews in both waves (about 7,889 observations). Post-stratification weights correct for attrition. Earnings are deflated with Stats SA CPI to September 2008 rand. Proxy questionnaire responses are used for a robustness check, and Stats SA Labour Force Surveys are used as a comparison.

Findings

  • Measured NEA rose sharply between 2008 and 2010 while employment and unemployment fell, a pattern the authors treat with suspicion. (p. 4)

    In 2010, 32% of the panel group (who were 20 to 55 in 2008) were NEA. This represents a 9.8 percentage point increase from 2008.

  • Employment status is only moderately stable: nearly 30% of the employed left employment and over 40% of the NEA entered the labour force. (p. 6)

    Just under thirty percent of those employed in 2008 were not employed in 2010 and over forty percent of those in NEA in 2008 were in the labour force in 2010.

  • Casual work is a transitory state, with most casual workers moving into regular employment. (p. 8)

    casual employment is a transitory state, with just 13.7% of those who were casually employed in 2008 being casually employed in 2010.

  • Overall immobility in employment status is 55.3%, pulled up by the stability of the employed. (p. 11)

    immobility between 2008 and 2010 with respect to employment status equals .553. In other words, 55.3% of individuals are in the same employment state in both 2008 and 2010.

  • Women have lower participation but greater mobility across employment status than men. (p. 13)

    The employment participation rate among the panel members is much lower for women than men (51.3% versus 41.9% in 2010)

  • Secondary-sector employment, driven by manufacturing, is the least stable, with large outflows especially for men. (p. 15)

    The exodus from secondary employment is particularly prominent with less than half of those who were in the sector in 2008 found there again in 2010.

  • Manufacturing employment declined, more deeply for men, while trade and community services grew. (p. 17)

    the decline in employment in the secondary sector is driven by decline in total employment in manufacturing. This decline was much deeper for men.

  • Moving into regular employment brings earnings gains and moving out of it brings losses. (p. 19)

    An even greater percentage of those moving from self-employment (80%) or casual employment (84%) into regular employment experienced earnings gains, with large mean and median gains in earnings.

  • Wave 2 contains a suspicious fall in subsistence agriculture employment, so those workers are excluded from several analyses. (p. 23)

    cannot fully explain the dramatic decline from 6.5% of employment in 2008 to 2% in 2010.

  • The hours-worked variable is unreliable because of a likely fieldwork misinterpretation, so it is not used. (p. 24)

    There is a dramatic increase in the number of respondents reporting they work less than 10 hours per week, from 6.4%in 2008 to 16.4% in 2010.