Stellenbosch Working Paper Series No. WP08/2016

The emerging consensus regarding high and rising levels of graduate unemployment in South Africa in recent years has primarily been based on a select number of studies, all of which have serious shortcomings ranging from deficient definitions of “graduates” to the use of outdated, incomplete, or unrepresentative data. Moreover, given the heterogeneity in the quality of higher education in South Africa, existing findings regarding aggregate graduate unemployment in the country, even if accurate, mask the substantial variation in labour market outcomes which are likely to be faced by graduates from different higher education institutions. This paper attempts to address these issues by examining graduate unemployment and employment in South Africa with specific emphasis on the type and quality of higher education using multiple labour force survey and administrative datasets. Its primary contribution is to incorporate the effect of potential measures of higher education institution type and quality on the likelihood of graduate unemployment and employment by probabilistically linking graduates that are observed in labour force survey data to the institutions from which they are likely to have graduated given their time-invariant observable characteristics and the known demographic composition of the graduates produced by each of South Africa’s formal higher education institutions every year. The analysis shows that graduate unemployment in South Africa is not only low in relation to overall unemployment in the country, but that much of the racially-delineated differentials in graduate unemployment and employment outcomes can likely be attributed to heterogeneity in the quality and type of higher education institutions commonly attended by individuals from different racial backgrounds.

JEL Classification:
J64, I23, I26

graduates, unemployment, higher education