Measuring social and economic mobility in South Africa: new approaches to well-known survey data concerns

Zoch, Asmus (2016-12)

Thesis (DPhil)--Stellenbosch University, 2016.

Thesis

ENGLISH SUMMARY : The aim of this dissertation is measuring economic and social mobility in South Africa. The work from this thesis shows that various problems with survey responses can produce misleading impressions of the South African labour market and of income dynamics. This highlights the importance of measuring variables of interest accurately and to carefully consider the ways in which unreliable responses can bias the results of conventional estimators. It will be demonstrated that even the most appropriate estimator and identification strategy can fail to yield unbiased estimates if important measurement issues are ignored. To address these shortcomings this thesis applies and adapts new approaches to remedy well-known survey data reliability concerns. The most important findings of the three chapters are as follows: First, in the context of high unemployment and weak labour market attachment for many South African youth, the formulation of survey questions matters and approaches commonly used to elicit reliable responses in developed countries cannot be assumed to work equally well. This is particularly true for subjective measures. Hence, answers to the traditional question on reservation wages may fail to provide meaningful answers. It appears that different formulations and ordering of the reservation wage question can trigger different cognitive processes in the respondent that elicit different answers. However, using a series of questions intended to elicit a more accurate response, the new reservation wage measure seems to be more internally consistent and the regression results to be in line with labour market search models. Second, this thesis shows that estimating the speed of convergence between the poorest and richest households using micro growth regressions without controlling for measurement error would overestimate income mobility significantly. Therefore, a newly developed GMM estimator was applied to four large national panel studies to obtain less biased β estimates. The findings of four large representative national panel studies from the USA, South Africa, Chile and Tanzania show that naïve OLS regression coefficients would overestimate the extent of income mobility by a factor of about 4-6. The hypothesis of no measurement error can be rejected for all the countries observed. While the data reliability for the US, Chile and Tanzania correspond to their levels of economic development, South Africa’s data reliability appears to be unexpectedly high. The nonparametric estimates also show that the speed of convergence varies over the income distribution and that income is more reliably captured for richer than for poorer households. Third, the relative importance of family, neighbourhood and school quality in explaining variation in socio- economic outcomes are evaluated. Using spatial merging techniques to combine different data sets, new school wealth quintiles have been created that predict individual learner and school outcomes more accurately than the old school quintiles. This chapter provides evidence of the importance of quality education in explaining university enrolment. In addition, there seem to be a significant premium for quality education in labour markets earnings regressions, which confirms the long-term importance of schooling.

AFRIKAANSE OPSOMMING : Die doel van hierdie tesis is om die ekonomiese en sosiale mobiliteit in Suid-Afrika te meet. Die werk wat gedoen is, toon dat verskeie probleme met opname-response tot 'n wanindruk oor die Suid-Afrikaanse arbeidsmark en inkomste-dinamiek kan lei. Dit beklemtoon hoe belangrik dit is om die veranderlikes van belang akkuraat te meet, en om die maniere waarop onbetroubare response die uitkomste van konvensionele beramers kan beïnvloed, versigtig te oorweeg. Daar sal geïllustreer word dat selfs die mees toepaslike beraming- en identifikasiestrategie tot bevooroordeelde beramings kan lei wanneer belangrike metingskwessies verontagsaam word. Ten einde hierdie tekortkominge te bowe te kom, word nuwe en aangepaste benaderings in die studie gebruik om bekende betroubaarheidskwessies rakende opname-data uit die weg te ruim. Die belangrikste bevindinge van die drie hoofstukke is soos volg: Eerstens, in 'n omgewing waar baie Suid-Afrikaanse jongmense onderhewig is aan 'n hoë voorkoms van werkloosheid en swak koppeling aan die arbeidsmark, maak die formulering van opname-vrae saak. Daar kan nie aanvaar word dat metodes wat algemeen gebruik word om betroubare response in ontwikkelde lande te verkry, net so doeltreffend sal wees nie, veral in die geval van subjektiewe maatstawwe. Antwoorde op die tradisonele vraag oor reserwelone kan dus niksseggend wees. Dit kom voor asof die vraag, wanneer dit anders geformuleer of georganiseer word, aanleiding gee tot ander kognitiewe prosesse in die respondent, wat ander antwoorde ontlok. Deur 'n reeks vrae te gebruik wat daarop gemik is om 'n meer akkurate respons uit te lok, is die nuwe maatstaf vir reserwelone op die oog af intern meer konsekwent en die regressie-resultate in ooreenstemming met werksoekmodelle. Tweedens wys hierdie tesis dat inkomstemobiliteit aansienlik oorskat word by die beraming van konvergensiespoed tussen die armste en rykste huishoudings indien mikro-groeiregressies gebruik word sonder om metingsfoute in ag te neem. 'n Nuwe GMM-beramer is derhalwe op vier groot, nasionale paneelstudies toegepas om minder bevooroordeelde -beramings te kry. Die bevindinge van vier groot, verteenwoordigende paneelstudies in die VSA, Suid-Afrika, Chili en TanzaniG toon dat naïewe OLS- (Ordinary Least Squares) regressie-koëffisiënte die mate van inkomstemobiliteit met 'n faktor van 4-6 oorskat. Die hipotese van geen metingsfoute kan verwerp word in die geval van al die betrokke lande. Terwyl die betroubaarheid van die data in die geval van die VSA, Chili en TanzaniG ooreenstem met die vlak van hul ekonomiese ontwikkeling, lyk die databetroubaarheid van Suid-Afrika onverwags hoog. Die nie-parametriese beramings wys ook dat die konvergensiespoed met betrekking tot die inkomsteverspreiding wissel, en dat inkomste meer betroubaar weergegee word by ryker as by armer huishoudings. Derdens word die relatiewe belangrikheid van die gesin, die woonbuurt en die kwaliteit van die skool geGvalueer ten einde variasies in sosio-ekonomiese uitkomste te verklaar. Deur ruimtelike samesmeltingstegnieke te gebruik om verskilende datastelle te kombineer, is nuwe welvaartskwintiele vir skole geskep. Hierdie nuwe kwintiele voorspel individuele leerder- en skooluitkomste akkurater as die ou skoolkwintiele. Die bewys van hoe belangrik kwaliteitonderrig is, word verskaf wanneer universiteitsinskrywings verduidelik word. Dit kom boonop voor asof kwaliteitonderwys in arbeidsmarkte met verdienstefunksies sterk in aanvraag is. Dit bevestig die langtermyn belangrikheid van onderwys.

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