Dr Ihsaan Bassier

We find that women sorting into lower paying firms explains nearly half of the gender pay gap in South Africa. Using matched employer-employee panel data covering the universe of formal workers, we show sorting varies considerably over the life cycle: the firm-pay gender gap is negligible for the youngest workers, grows steeply for 25-35 year olds (i.e. typical child-rearing years), and narrows for older workers. The increase is driven by those continuously employed — while women are almost as likely as men to switch firms, men are more likely to switch to better-paying firms, consistent with discrimination or non-pay amenities. Churn also contributes to the gap (though is relatively constant), since women enter formal employment at worse-paying firms than men. The relative importance of the continuously employed versus entrants depends on the size of the formal sector, thus linking the life cycle patterns underlying gender gaps with economic development.

We estimate the elasticity of vacancy duration with respect to posted wages, using data from the near-universe of online job adverts in the United Kingdom. Our research design leverages firm-level wage policies that are plausibly exogenous to hiring difficulties on specific job vacancies, and controls for job and market-level fixed-effects. Wage policies are defined based on external information on pay settlements, or on sharp, internally-defined, firm-level changes. In our preferred specifications, we estimate duration elasticities in the range −3 to −5, which are substantially larger than the few existing estimates.

What were the effects of a 52 per cent increase in the minimum wage in the agricultural sector in South Africa in 2013? We estimate the short run effects of this policy change on the income, employment, and poverty rate of farmworkers, using individual-level panel data from the Quarterly Labour Force Surveys (QLFS). Before the implementation date, 90 per cent of farmworkers were paid below the new minimum wage level. We find that the wage gain of farmworkers is strongly quadratically related to pre-implementation wages, suggesting lower compliance as the gap between the minimum and the pre-implementation wage increases. We estimate that farmworkers received a median wage increase of 9 per cent as a result of the policy, and we find no evidence of job losses. Overall, farmworkers were 7 per cent less likely to have household income per person below the poverty line. One possible explanation for these outcomes is that endogenous compliance may mitigate against unemployment effects. While the minimum wage literature is large, our paper adds to the small subset of this literature on large increases, partial compliance, and poverty effects.

Up-to-date, nationally representative household income/expenditure data are crucial for estimating poverty during the Covid-19 pandemic and to policy-making more broadly, but many developing countries lack such data. We present new pandemic poverty estimates for South Africa, simulating incomes in pre-pandemic household surveys using contemporary labour market data to account for job losses between 2020 Q1 and 2021 Q4. Improving on much of the existing literature, we use observed rather than simulated shocks and allow for uneven impacts of the pandemic by employment sector and demographic characteristics. We present three updating methods, each of which give primacy to a different data source, and include diagnostic and robustness checks. Giving primacy to the 2017 National Income Dynamics Study (NIDS) Wave 5 produces the largest estimate of pandemic-period job-loss-induced poverty: a headcount ratio increase at the upper-bound poverty line of 5.2 percentage points (3.1 million people/13 per cent) and poverty gap increase of 3.8 percentage points (21 per cent). Giving primacy to the contemporaneous Quarterly Labour Force Surveys (QLFS) data produces the lowest estimated change: a headcount ratio increase of 3.0 percentage points (1.8 million people/7 per cent) and poverty gap increase of 2.5 percentage points (12 per cent). Giving primacy instead to the official 2014/15 Living Conditions Survey (LCS) results in poverty increases between these outer bounds. Simulating receipt of a new pandemic-period social assistance cash transfer, the Special COVID-19 Social Relief of Distress social grant, substantially mitigates poverty effects, with a poverty headcount increase of 1.1–3.4 percentage points and a poverty gap increase of 0.2–1.5 percentage points.

We estimate COVID‐19‐related employment and poverty impacts in South Africa. We observe a 40% decline in active employment between February and April 2020, half of which was composed of job terminations rather than furloughs. Initially, vulnerable groups were disproportionately affected by the labour market shock. Exploiting the dataset's panel dimension and comparing lockdown incomes of job losers to reweighted job retainers, we estimate that approximately 15%–35% of job losers fell into poverty in April. We find evidence of a limited recovery in the labour market and a decrease in poverty by June, in part attributable to expanded emergency social assistance.

How important are firms for wage inequality in developing countries where structural unemployment is high? Research focused on contexts close to full employment has suggested a substantial role of firms in labor market inequality. Using matched employer–employee data from South Africa, I find that firms explain a larger share of wage variation than in richer countries. I consider drivers of this, documenting first a higher productivity dispersion as found for other developing countries. Secondly, I estimate the separations elasticity by instrumenting wages of matched workers with firm wages, and I find a low separations elasticity. This generates a high degree of monopsony, and the correspondingly high estimated rent-sharing elasticity helps explain the important role of firm wage policies in inequality. Monopsony may be driven by higher unemployment, and regional heterogeneity provides suggestive evidence for this. Such firm-level competitive dynamics may exacerbate inequality in developing countries more generally. •The role of firms in wage inequality is under-researched in developing countries.•The variance in firm wage premia is higher in South Africa than in richer countries.•Drivers are higher productivity dispersion and lower firm labor supply elasticity.•High unemployment may contribute to a low firm labor supply elasticity.•Such drivers of firm-based inequality may generalize to the development process.

•The COVID-19 labour market shock will have severe impacts on informal workers. However these workers are often invisible to government agencies.•Considering the case of South Africa, we examine how expansion of an already-established social assistance system can protect informal workers.•Taking the position of a government with little real-time data, we use a pre-pandemic survey to simulate the COVID-19 shock and different responses.•We show that the optimal policy is sensitive to unavoidable technical assumptions and normative judgments about which populations to prioritise.•A combined increase in the Child Support Grant and introduction of a feasible new grant for those not formally employed is usually optimal. The COVID-19 pandemic presents a particular challenge to countries with high levels of labour market informality. Informal workers and their households are especially vulnerable to the negative economic consequences of the pandemic and associated lockdown measures, while the very fact of their informality makes it difficult for governments to quickly provide targeted economic relief. Using South Africa as a case study, we examine how an established social assistance system – not originally designed to support informal workers – can be re-purposed to provide emergency relief to these workers and their households. We examine how expansions of this system on the intensive margin (increasing the value of existing social grants) and extensive margin (introducing a new feasibly-implemented grant) can be used to mitigate this COVID-19-associated poverty. We compare the efficacy of the different policies by using pre-pandemic nationally representative household survey data to project how a negative shock to informal incomes can be mitigated by the different social grant measures, with a particular emphasis on poverty impacts. We find that an intensive-margin expansion of the existing Child Support Grant is complementary to the extensive-margin introduction of a new Special COVID-19 Grant, and that this combined policy intervention performs best out of the options considered. However conclusions as to this “optimal policy” are not simple technical determinations. We show that these conclusions are in fact sensitive to both unavoidable technical assumptions about how resources are consumed and shared within the household, as well as to normative value judgments about which populations to prioritise and how to value poverty reduction spillovers amongst the non-targeted group. While our approach helps identify a range of sensible policy approaches, there is no escaping the limits to our knowledge or the issue of normative goals – a finding likely applicable to a broad range of empirical policy analyses.

We estimate the impact of the firm component of hourly wage variation on separations from matched Oregon employer-employee data. We use both firm fixed effects estimated from a wage equation as well as a matched instrumental variable (IV) event study around employment transitions between firms. Separations decline with firm wage policies.: the implied firm-level labor supply elasticities are around 4, consistent with recent quasi-experimental evidence, but three to four times larger than existing estimates using individual wages. We find that monopsonistic competition is pervasive, even in low-wage, high-turnover sectors, but with little heterogeneity by labor market concentration.