A sectoral analysis of output elasticity of employment in South Africa
South African Journal of Economic and Management Sciences
| Field | Value | |
| Title | A sectoral analysis of output elasticity of employment in South Africa | |
| Creator | Ngundu, Marvellous Ngalawa, Harold | |
| Description | Background: Despite considerable efforts by the South African government, such as the Youth Employment Service (YES) programme, unemployment remains an enigma.Aim: The study seeks to explore the responsiveness of sectoral employment to changes in the sectoral output in South Africa.Setting: We focus on the agriculture and informal sectors, with the understanding that a large portion (93%) of South Africa’s unemployed population does not have tertiary education qualifications. Thus, the current South Africa’s unemployment phenomenon appears to necessitate the development of policies that will create inclusive skill-based jobs. The study’s hypothesis is theoretically underpinned by Okun’s law, according to which output growth is considered as a primary labour demand stimulus in the economy. When the labour demand function is co-integrated, Okun’s law is assumed to hold; otherwise, ‘jobless growth’ applies.Method: The findings from the Engle-Granger two-step testing procedure on the double-log linear labour demand function over the 1993–2018 period show evidence of jobless growth in the formal agricultural sector, while the informal agriculture and informal non-agriculture sectors demonstrated features of Okun’s law.Results: Notably, the authors found a fairly elastic (1.35%) employment intensity in output growth in the non-agriculture informal sector, with an equilibrium adjustment rate of 86% within a year, ceteris paribus.Conclusion: The findings suggest that, while South Africa’s formal agriculture is no longer labour-intensive, due to agricultural mechanisation, economic policy consciousness in the informal sector, including agri-entrepreneurship, is necessary to create inclusive mass employment in South Africa.Contribution: This study delves into the informal sector, which has been frequently overlooked as a potential solution to South Africa’s unemployment crisis. | |
| Publisher | AOSIS Publishing | |
| Date | 2023-08-28 | |
| Identifier | 10.4102/sajems.v26i1.4825 | |
| Source | South African Journal of Economic and Management Sciences; Vol 26, No 1 (2023); 8 pages 2222-3436 1015-8812 | |
| Language | eng | |
| Relation |
The following web links (URLs) may trigger a file download or direct you to an alternative webpage to gain access to a publication file format of the published article:
https://sajems.org/index.php/sajems/article/view/4825/2790
https://sajems.org/index.php/sajems/article/view/4825/2791
https://sajems.org/index.php/sajems/article/view/4825/2792
https://sajems.org/index.php/sajems/article/view/4825/2793
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