Ph.D. Thesis – C. Burger

BURGER, C. (2016). A structural approach to modelling South African labour market decisions

Ph.D. Thesis

Author(s): Cobus Burger

Supervisor: Professor Servaas van der Berg

Institution: Stellenbosch University, Faculty of Economic and Management Sciences, Department of Economics

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Youth unemployment is high in South Africa and especially high among black males. The slow absorption of young black males into the employment is somewhat surprising given that the descriptive statistics suggest that employment mobility in South Africa is high. In the first chapter, I investigate whether the labour market is truly as mobile as reported or whether the transition estimate is rather a reflection of misclassification error or unobserved individual heterogeneity. Thereafter, in chapter two, I proceed to examine the role of reservation wages on unemployment. Unlike previous studies I do not make use of self-reported reservation wages. Instead I use a job search model to recover the reservation wages that are consistent with the behaviour we observe in the labour market. In the final chapter, I look at the role of education on labour market outcomes. More specifically, at whether ability bias is present and whether current estimates are inflated. I do so through a dynamic programming model that mimics the schooling decision for forward-looking optimizing agents.