OpenUCT :: Browsing by Subject "Applied Economics"

Browsing by Subject "Applied Economics"

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Open Access
Adolescent econometricians : perceived earnings differentials and choice for tertiary education
(2008) Moyo, Alfred N F; Leibbrandt, Murray;
Includes bibliographical references (leaves 69-73).
Open Access
Agricultural change and farmworker living standards in post-apartheid South Africa
(2019) Le Roux, Leonard; Bhorat, Haroon; Conradie, Beatrice
Commercial agriculture in South Africa has been subject to accelerated regulatory and economic change in the time since the country’s democratization. This dissertation focusses on some of the interactions of these changes with the prospects of low-income farmworkers and farm dwellers through exploring two interlinked questions. The first of these asks whether consolidation in the industry has extended to growing firm size and in-turn, whether farmworkers in larger firms earn higher wages than those in small firms. An analysis of the firm-size earnings relationship using long run labour survey data is discussed in the context of current debates on agrarian policy. The second question relates to the process of rural-urban migration off commercial farms and into urban areas in the post-apartheid period. Using a panel of individuals and in so doing, controlling for unobserved individual heterogeneity and initial household fixed effects, a difference in differences approach is used to estimate the impacts of migration on various measures of individual living standards. Together these two questions attempt to characterise aspects of the changing nature of life on farms. The results suggest that there exists a significant firm-size earnings premium for farmworkers and that this may be increasing over time. In addition the National Income Dynamics Study (NIDS) data suggests that migration off farms has mixed implications for living standards, but is associated with significant gains in per-capita income, electricity and sanitation access.
Open Access
Aid, infrastructure and growth
(2011) Mti, Sehlule Nontutuzelo; Sarr, Mare
In their seminal paper, Burnside and Dollar (2000) introduced the interactive term aid*policy into growth equations. Most studies up until then had merely added aid as a variable on its own with GDP growth as the dependent variable in order to check aid effectiveness.
Open Access
An analysis of subsidies within the plastics recycling industry
(2016) Black, David; Visser, Martine; Grybowski, Lukasz
Polyethylene terephthalate (PET) is widely used in the manufacture of food and beverage containers, in addition to a variety of fibres. PET is considered to be 100% recyclable and can be recycled into a number of different end-use streams: bottle-to-bottle; bottle-to-foodgrade, or bottle-to-fibre. In South Africa, the PET Recycling Company (trading as PETCO) was established to avoid the possibility of government-imposed punitive legislation and to alleviate the impact of PET-based litter. PETCO generates revenue through the collection of voluntary levies from PET manufacturers and supports the recycling of PET through the administration of recycling subsidies and the unlocking of constraints in the PET recycling value chain. This study sets out to describe the PET recycling industry and empirically assess the effectiveness of PETCO's recycling subsidies through regression analysis. As a background to the regression analysis, the study builds the theory behind production and cost function analysis (in addition to the associated duality theory). However, due to the combination of the research question and the limited data availability, an alternative model was adopted, in order to explain as much variation in production tonnages as possible.
Open Access
Assessing the effects of two agricultural minimum wage shocks in South Africa
(2017) Van der Zee, Kirsten; Bhorat, Haroon
In March of 2003, South Africa's first agricultural minimum wage was implemented. Ten years later, following major strikes and protests among farm workers in theWestern Cape, the prescribed agricultural minimum wage was increased by a considerable 52 percent from R69 per day to R105 per day, significantly more than the usual inflation rate increases. This paper investigates the impacts of these two minimum wage shocks, specifically assessing the labour market response in terms of employment, wages and working conditions, as well as assessing how farmers adjusted their operations in expectation of the minimum wage hike. The findings indicate that the probability of employment as a farm worker decreased in response to both minimum wage shocks, however the disemployment effect was sharper for the introduction of the minimum wage than it was for the 2013 amendment. It is observed that relatively more part-time workers lost their jobs in response to the first shock, resulting in there being almost no part-time workers in the sector by the time the second minimum wage shock occurred. Wages increased significantly in response to both minimum wage shocks, however despite this, violation consistently remained a challenge in the sector. Lastly, the paper finds that employment, wages and contract coverage began adjusting up to two quarters prior to the 2013 legislated increase in the minimum wage, suggesting that there are dynamic responses to minimum wages, and that farmers may make operational decisions in expectation of new legislation.
Open Access
An assessment of the quantum for financial provision of mine closures: a Monte Carlo approach.
(2012) Hewitson, Shaun B; Leiman, Anthony
Poor mine closure policy threatens both society and the environment. Some of the more prominent threats that have manifested are acid mine drainage, slimes dams and toxic dust from dumps. Current legislation requires that new mines set aside funds to cover their rehabilitation costs at closure.
Open Access
Boys will always be boys? The impacts of gender-based Affirmative Action and Role Models on competitiveness in the lab
(2018) Hare, Aimee Elizabeth; Burns, Justine
Gender differences in labour market outcomes are pervasive in current society. Competitiveness is viewed as a possible factor contributing to the favourable labour market outcomes for men, with the stylised fact being that men are more competitive than women on average. In this study, we experimentally investigate whether institutional structures (gender-based Affirmative Action and Role Models) mitigate the gender differences in competitiveness. Although Affirmative Action has been explored in the literature, the longer-term implications of the preferential treatment creating role model representation have not been examined. Consistent with the literature, we find men have a higher preference for a competitive environment compared with women in our sample. However, there are no significant impacts of the gender based institutional structures on the choice to compete in our experiment. When analysing the responsiveness of performance to a competitive environment and the associated beliefs, we see the female role model treatment encourages a competitive spirit in everyone, whereas the Affirmative Action treatment has a negative effect on the competitive performance of African men. In this experiment, gender-based institutions therefore either have unexpected effects of encouraging competitiveness in all participants, or inadvertently reinforce competitiveness gaps across other dimensions of identity, such as population-group. One therefore needs to be considerate of other dimensions of identity in addition to gender when devising preferential treatment policies, and the resulting role model representation, in practice. Changes in beliefs can only partially be exercised as an explanatory channel for these effects.
Open Access
Capital flight and the role of exchange rates in Nigeria, South Africa and Zambia
(2015) Mbewe, Samson; Ellyne, Mark
The problem of capital flight presents an interesting paradox towards capital accumulation in Sub-Saharan Africa. Though Africa has been labelled as "the rising continent" by various researchers, we continue to see capital flight and its adverse effects extend beyond the lack of domestic investment capital, to sluggish economic growth and disquieting poverty rates. This paradox highlights the importance of understanding the drivers of capital flight from Africa. Among the many postulated determinants, this study investigates the effect of the exchange rate on capital flight using 3 case studies from Nigeria, South Africa and Zambia for the period 1970 to 2010 . By employing Granger's (1969) causality test, we investigate the causal relation between capital flight and the exchange rate. We further use the Johansen (1988) Method of Cointegration to determine the existence of a long run relationship and estimate a Vector Error Correction Model (VECM) to determine the short run dynamics. Our granger causality test results suggest that the direction of causality between capital flight and the real exchange rate only holds in the period under analysis and therefore, it should not be assumed to hold in different time periods. Our main findings suggest that capital flight from Nigeria, South Africa and Zambia is habitually motivated by portfolio considerations. We find that capital flight from Nigeria and South Africa is driven by expected currency depreciation while capital flight from Zambia is driven by expected currency appreciation in the long run. Our other findings suggest that other macroeconomic policy errors in the form of inflation unpredictability and foreign direct investment also increase capital flight from Nigeria, South Africa and Zambia. We also find that political factors have a significant role in determining capital flight from Nigeria, South Africa and Zambia. We however find inconclusive evidence of the short run effects in all three countries. It is recommended that the imposition of efficient exchange controls can curb capital flight when implemented concurrently with effective macroeconomic management practices by the fiscal authorities.
Open Access
A critical evaluation of road pricing in South Africa Duncan Lishman.
(2013) Lishman, Duncan; Leiman, Anthony
In an attempt to provide much-needed finance for road investments, the government’s national road agency has introduced numerous toll roads over the last three decades. It is currently in the process of introducing open road tolling on a network of Gauteng’s highways. Economic theory provides a rich understanding for pricing road use, particularly with regard to the pricing of externalities. By quantifying these externalities for the South African case, this paper reveals evidence of gross mispricing for road use. Specifically, the magnitude of road freight trucks’ external costs indicates that there is an absolute underpricing of road use for these vehicles. On the grounds of the externalities considered in this paper, passenger cars should, in fact, face a toll negligible in comparison to heavy vehicles. That they do not points to massive cross-subsidisation and that the relative price between light and heavy vehicles should be revisited. Appropriate pricing will improve economic efficiency by reducing cross-subsidisation. It will also rationalise the choice of freight modalities in South Africa, with the likely effect that a greater volume of goods will be carried by rail. Despite the welfare gains that the policy offers, one must be cognisant of the distortions that optimal road pricing may have.
Open Access
Derivatives and Economic Growth in South Africa: Lessons for Kenya
(2019) Mulei, Mutava Michael; Abraham, Haim; Mateane, Lebogang
Kenya is now at advanced stages of introducing a derivatives market. Its aim is to enhance Kenya’s medium-term growth prospects as outlined in the capital markets master plan 2014- 2023. This study interrogates the effect of derivatives on economic growth and growth volatility, learning from the South African experience. The study also identifies some of the factors that drove South Africa’s implementation of derivatives as a development tool - Some countries have enacted legislation for it yet have never transitioned to successful operations. The study paints a picture of the current global and regional view of derivatives and examines empirical evidence from previous studies. Using a GMM approach, the study finds no significant relationship between trading derivatives and economic growth in South Africa. Thereafter, economic growth volatility is modelled using the GARCH method and the effects of derivatives on that volatility are tested. No effect is found. The study finds that the derivative market in South Africa is not yet sufficiently developed to benefit the economy. Finally, the relationship between economic development and derivatives is appraised using a Granger causality test: this suggests that development tends to engender the evolution of derivatives in the long run.
Open Access
Developing consumption feedback principles for monthly utility bills informed by behavioural economics: evidence from controlled experiments
(2017) Brühl, Johanna Maria; Visser, Martine
Better feedback principles for the utility bills in South Africa need to be developed. Utility providers might be able to "nudge" consumers towards more desirable consumption patterns by delivering simpler and better feedback informed by applied behavioural sciences. Two sets of controlled experiments were conducted with over 1,500 subjects to identify bill design strategies that could overcome two major barriers to effective consumption feedback: • the complexity of the utility bill, especially with regards to tariff calculations, and • consumer's declining mindfulness of utility consumption between billing moments. The "Utility Bill Redesign" experiment, using a randomised control trial, investigates how improving billing feedback design increases consumer's understanding of energy usage and costs. More than 1,300 participants are randomly assigned to different treatment groups and receive one of nine redesigned utility bills or the current standard bill. Thereafter, participant's understanding of the bill they received is tested through a questionnaire. We find that restructuring the bill in a logical order and displaying the amount of electricity consumed in each tariff block with separate bar graphs is a successful way to increase consumer understanding of the bill, especially with regards to the step tariff. Further, the results clearly show that consumers are unable to make sense of a utility bill that is not in their home language, even when adding utility specific symbols. We conclude that significant low-cost improvements can be made to utility bills to increase consumer comprehension. In the "Attention Redirection" experiment, participants are assigned to different treatment groups and are given an online task that requires daily attention and effort in order to maximise pay-offs. We find that daily SMS reminders significantly redirect attention to the daily task. A blank graph, given to participants at the beginning of the experiment to assist them in self-managing their behaviour, has no effect on task adherence. The results illustrate how inattention routinely leads to sub-optimal behaviour in a specific task area and the resulting welfare loss. A purely bill-based strategy is rendered unsuccessful.
Open Access
Developments in the South African credit market and analysis on indebted consumers using NIDS data
(2016) Choonoo, Samantha; Bhorat, Haroon
Household debt measures provide vital information regarding society's financial wellbeing. This paper uses a comparative static analysis approach to evaluate total and consumer debt at the household level using two waves of NIDS data relating to the periods 2008 and 2012. The descriptive analysis is based on the share of income servicing debt by various household characteristics while the econometric analysis models the determinants of debt servicing at the household level. The descriptive statistics illustrates the financial vulnerable position of low income households as they spend a proportionally larger share of household income on debt payments and their main sources of credit are from retailers, hire purchase agreements and loan sharks. The OLS and Median Quantile regression results for 2008 and 2012 under total debt analysis indicate a dampening of the negative effect for female, Black, Coloured, no schooling and primary schooling variables; a strengthening of the positive effect for formal house structure made of brick; a dampening of the positive effect for house ownership, post-secondary education, employment and urban variables; and a strengthening of the negative effect associated with government grant income. Results for consumer debt servicing for the same period suggests a narrowing of the gender gap; that lower levels of education are less of a barrier; and that the positive effect associated with urban settlement type has diminished.
Open Access
Disease burden, cost modelling and the AIDS funding debate-towards clarity on whether the world is spending 'too much' on HIV/AIDS
(2011) MacDevette, Matthew; Nattrass, Nicoli
With pressures from the recent financial crisis forcing donors to carefully review their spending priorities, some have claimed, firstly, that HIV/AIDS receives too much money relative to its disease burden and, secondly, that the future costs of treating those with the disease will become unmanageable. This paper seeks to clarify each of these two areas...
Open Access
Does IEB make the grade? Alternative testing methods and educational outcomes: The case of the IEB in South Africa
(2019) Hill, Robert; Bhorat, Haroon
According to the Independent Examinations Board (IEB, 2015), students who write the IEB National Senior Certificate school-leaving exam are at a distinct advantage and seem to be better prepared for the pressures and challenges faced during their university years than are those students who wrote the Department of Basic Education (DBE) exams. Although the underlying curriculum is no different, the IEB exam is thought to be more challenging and to encourage more critical thinking and deeper engagement with the material than the DBE exam. Thus, this research paper aims to provide a rigorous investigation of whether those students who write the IEB exam at the end of their matric year achieve higher university grades in their first year of study, as well as a decomposition of this effect into a teaching effect and a testing effect. This is done by exploiting within-school variation of examination boards. Given that studies investigating independent school impacts on university performance have predominantly been conducted internationally (McNabb et al., 2002; Ogg et al., 2009; Smith & Naylor, 2001; Smith & Naylor, 2005), this paper will add to the literature in the South African context. By using the techniques of OLS, quantile regression, binary choice probit models and ordered probit models, this paper attempts to provide a holistic view of the effect that the IEB school-leaving examination has on a student’s academic performance at a tertiary level. The data used in this study is also unique, in that it is made up of an amalgamation of student record data obtained from the University of Cape Town (UCT), as well as governmental survey data. This paper finds that the IEB examination has a strong positive effect of between 1.6 and 6.5 percentage points on first-year GPA at UCT, particularly in the Medicine and Engineering faculties. Furthermore, this effect is present, but decreasing across the entirety of the performance distribution. Students with an IEB matric are significantly more likely to achieve a 2nd class pass or higher at the end of their first year of study than are comparable students from Former African schools. When decomposing the IEB effect into a teaching effect and a testing effect, it was found that the majority of the impact of the IEB comes simply from the different exam, and that teaching effects are minimal. A further finding of interest is that the IEB effect seems to be independent of resource availability, and that simply the exposure to the alternative testing method is sufficient for students to see significant improvements in their university performance. These results are robust to changes in functional form, and provide a strong and clear picture that perhaps South Africa should be adopting more of the IEB policies towards teaching and learning on a national scale.
Open Access
Does monetary policy affect real output in a supply-constrained economy: case of Malawi
(2018) Chingoli, Chionetsero Bartwell; Ellyne, Mark
In a low income economy with a relatively undeveloped financial sector, the normal monetary policy instruments may not have the anticipated desired impact. In particular, economies that may be relatively supply constrained may not respond to money policies as anticipated, owing to a lack of flexibility in the system from economic and institutional constraints. In this case, monetary policies that might otherwise affect the creation of capital for investment and a robust environment for businesses to thrive may not occur. We consider the case of Malawi, which is acknowledged to have a number of supply-side constraints including those related to electricity production and water for agricultural production. We begin with a Cobb-Douglas type production function for the country, which includes droughts, owing to its effect on both electricity production and agriculture. This underlying production function provides an estimate of the long-run supply capacity based on capital, labour and water constraints. In a second stage of the model, we use the Engle-Granger approach to estimate a modified Error Correction Model (ECM) for a short-run growth equation, where we include the movements in monetary variables to test the impact of monetary policy on growth. We estimate our models in EViews for the period 1980 to 2014. Our estimated long-run production function shows that drought depresses real output, and capital and labour have roughly equal importance as factors of production. We then estimate a short-run growth equation using the ECM methodology and find that real exchange rate and real interest rate do not have a significant impact on growth although they have the anticipated sign. We also find that net credit to government and net credit to private sector negatively affect the growth in real output. Although the econometric results are not strong, we note that Malawi has had a history of volatile inflation, which appears to have negative impacts on real output. We believe that our results highlight the importance of more stable management of the money supply, as the monetarism school of thought would propose. We also note that government has been responsible for prolonged fiscal deficits and high borrowing, which may be a cause of the volatile monetary growth. Thus greater coordination of fiscal and monetary policies are needed to create smoother growth and inflation paths.
Open Access
The economic behaviour of poly-drug users in the Western Cape: an analysis of pathways, prices, location and gender
(2017) Melis, Monique; Van Walbeek, Corne; Howell, Simon
The use of illicit substances in South Africa has implications for the health and well-being of both the user and society at large. Improved data on the markets for illicit psychostimulants are imperative for supporting policy efforts to manage their use and provide support structures for those affected. This thesis is one of the few detailed studies on the South African drug market using quantitative methods. It expands on what is known about illicit substance markets by addressing aspects of the following questions: (1) What is known about the nature and scope of the methamphetamine, methaqualone and heroin markets? (2) What is known about the characteristics of poly-substance consumers? (3) What does the sequential pattern of substance initiation look like? (4) Why do poly-substance consumers report different inter- and intra-regional drug prices? (5) What issues need further research? As a first step towards answering these questions, a dataset of 337 poly-substance users from the Western Cape was analysed. Survey participants were sampled using a respondent-driven sampling technique – an approach useful for sampling hidden populations and efficiently, adjusting for associated sampling bias. The study found that methamphetamine prices tend to fluctuate across a heterogeneous consumer base, with a significant discount paid by females who were observed, on average, to pay 25% less for this substance. Methaqualone has less variation across consumers but showed significant price dissimilarities between the two sites included in the analysis, with respondents from Greenpoint paying, on average, 18% higher prices. This indicates a lack of pricing information being shared between the two sites. Heroin showed variation across consumers, although the data on this substance were limited. Furthermore, the results show that substance markets operate differently across intra-city locations. The key rationale for this include high transit costs incurred by suppliers (as drugs cannot be transported openly), high search costs incurred by consumers and the prevalence of information asymmetries between regions. This study brings light and understanding to a traditionally hidden market and highly dangerous market; however, far more data on the South African and African drug market is needed.
Open Access
The effect of proximity to the northern borders on smoking prevalence among Namibian men
(2016) Peter, Tuyenikeumbo Rose; Van Walbeek, Corné
This thesis draws on the findings of research in the North America and EU, which shows that price differences of cigarettes between neighboring countries or states (in the Unites States of America) are associated with higher odds of cross border purchase and may lead to smuggling of cigarettes. This results in the tax revenue generation and public health aims of tobacco control policy, through tobacco taxation, being undermined. The Namibian Demographic Health Survey (NDHS) 2013 data is used to assess whether the probability of smoking among Wambo, Lozi and Kwangali Namibian men, living within 150km of the Angolan or Zambian borders, is affected by their proximity to these borders, given that cigarettes are cheaper in Angola and Zambia, than in Namibia. Logistic regressions are used to assess whether proximity to these borders has an effect on the likelihood of smoking, and smoking intensity. The results show that proximity to the border has no statistically significant effect on the probability of smoking or intensity among this group. This may mean that the Namibian government can in fact can pursue more aggressive tobacco taxes, to reduce consumption of tobacco products, without encouraging illicit trade, cross border purchases, or compromising its public health agenda.
Open Access
Estimation and evaluation of potential output dyanamics in an emerging country
(2009) Theoduloz, Tania; Viegi, Nicola
The aim of the dissertation is to give an overview of some of the most relevant and popular methods suggested for estimating potential output and the output gap. Three alternative methodologies - the Hodrick-Prescott filter, the production function approach and the SVAR approach - are compared and assessed empirically with respect to data representing the economic development of Uruguay in the last twenty years. Given the recent growth slowdown and abrupt recovery of Uruguay's GOP, the objective is to provide evidence on whether such changes are principally a cyclical shortfall or instead represent a structural shift towards a new growth path. Once the output gaps are estimated, their capacity as indicators of inflationary pressures is assessed through a basic gap model in which the change in inflation is related to the output gap, the money supply and the terms of trade.
Open Access
Experimental and self-reported measures of impulsivity: A reconsideration
(2021) Giger, Aidan; Hofmeyr, Andre
Impulsivity is a complex construct that most people seem to understand intuitively, but ordinarily struggle to define precisely. This term readily lends itself to everyday definitions, including acting without thinking, rash and quick decisions, and impatience. However, definitional issues regarding this term are widespread across scientific studies. Impulsiveness is often considered as a personality trait or a transient state within the psychology literature, whereby the former either refers to an underlying trait or the product thereof while the latter concerns itself with action or choice impulsivity. Additionally, economists typically only consider impulsivity that would be referred to by psychologists as choice impulsivity. We sought to better understand the relationship between self-reported impulsiveness as commonly measured by psychologists and incentivised impulsivity tasks as commonly used by experimental economists. Analysing data collected in 2012, we consider how a risk preference task and a time preference task are related to the Barratt Impulsiveness Scale-11 (BIS-11). We conduct joint maximum likelihood estimation to estimate discounting and risk preference parameters, and compare them to the BIS-11 total score and subscales. Our results show that the BIS-11 is related to time preferences, while only the motor impulsiveness and nonplanning subscales of the BIS-11 are related to risk preferences. These results suggest that the BIS-11 is not a direct substitute for experimental economic tasks when assessing impulsivity.
Open Access
Fertility, age, and the motherhood wage penalty in South Africa
(2022) Torrington, Catherine; Kerr, Andrew
The difference in earnings between mothers and women without children is well-documented around the world. In developing countries, however, there has been far less research on the effect of fertility on wages for women. In this dissertation, I study the effects of fertility on wages for African women in South Africa. Using the National Income Dynamics Study (NIDS), I study the changes in wages experienced by mothers and non-mothers using panel data methods, as well as Ordinary Least Squares. I find that mothers in South Africa experience a small penalty, but this is not experienced equally for all mothers. Mothers with three or more children experience a greater penalty than mothers with fewer children, while the effects of having young children does not substantially affect the difference in earnings experienced by mothers. Since the majority of women in South Africa become mothers, a high proportion of the employed female population will experience a wage penalty in South Africa. Family- friendly policies, such as subsidized childcare, and flexible working options for mothers, would go a long way to reducing the wage penalty experienced by South African mothers.