Settlement Patterns, Apartheid Geography and the Modern Labour Market

Transcription

1 Settlement Patterns, Apartheid Geography and the Modern Labour Market Dieter von Fintel Department of Economics, Stellenbosch University Economic History Cluster March 2013

2 Motivation o South Africa currently has among highest rates of unemployment in the world Yet: geographically disparate, with some regions experiencing relatively low unemployment rates Separate development leads to the claim that apartheid policies have caused this The 1913 Land Act and the Homeland effect Understand the mechanism through which physical geography has transmitted through historical settlement patterns and policies to a persistent, structural geographic imbalance in the labour market

3 Broad Unemployment by District (2001 Census) o High unemployment in homeland and adjacent regions Source: StatsSA

4 Modern labour market literature o Magruder (2012); Rankin (2013) Geographic labour market differences arise from modern institutions Collective bargaining arrangements Often cover an entire industry Forcing small firms to pay high wages So they do not survive The missing middle And we are left with a high wage- large firm industrial structure that works against employment creation o But are there not deeper historical disparities at play

5 Mean [log(earnings)] MD Wage Curve Estimates (FE) Broad Unempl * * * Unionisation 1.135*** 1.143*** 0.978*** 1.010*** Unem x Union 0.327* Dispersion *** * *** Firm size: ** Firm size: *** 0.408*** 0.324*** Firm: *** 0.663*** 0.459*** Firm: *** 0.727*** 0.510*** Firm size: *** 0.856*** 0.563*** Constant 6.114*** 6.160*** 5.811*** 5.844*** 5.856*** 6.149*** Controls Y Y Y Y Y Y Time FE Y Y Y Y Y Y R-squared N

6 Turning to historical arguments o Nunn & Puga (2012) the blessedness of ruggedness in Africa Ruggedness generally raises transaction costs and reduces national income But in Africa it is a blessing Potential slaves could hide from traders Slave exports negatively impact modern income levels Geography matters o South Africa has a high ruggedness index, low slave exports, but spatially unequally distributed Are there other channels by which geography influenced economic outcomes?

7 Homelands are broadly more concentrated in rugged areas

8 Settlement patterns o Concurs with the widespread belief that homelands were purposefully created in bad regions of South Africa o But is this true? Settlement patterns prior to 1913 Land Act determined restrictions on land acquisition (Vink et al) So did African farmers settle irrationally or rationally?

9 Rainfall homelands in some of the most favourable regions!

10 Structural Favourability of Soil random?

11 Water-retaining capacity of soil

12 A summary o o Homelands concentrated in Rugged regions With higher rainfall And perhaps somewhat poorer soils, though not clear-cut With higher modern unemployment Focussing on first two observations, what could match this settlement pattern? Similar to Nunn s argument, nomadic farmers would have retreated to rugged areas to avoid destabilising effect of Mfecane (Fourie) But still in favourable, high rain regions HOWEVER: later policies reduced this favourable condition Perhaps why stock breeding more central than diverse crop cultivation on rugged ground????

13 Data o Create a panel of broad black male unemployment rates at Magisterial District level using LFS 2001b to 2004a o Merge in geographical data Ruggedness: Nunn & Diego (2012) Rainfall: Lynch (2004) o Obtain other district level indicators from General Household Survey

14 The Homeland Effect Ruggedness Rain African Male Broad Unemployment African Female White Male White Female Homeland 0.672*** *** 0.152*** 0.039*** 0.026** Constant 2.051*** *** 0.333*** 0.499*** 0.049*** 0.122*** R-squared N F statistic

15 African Male Unemployment Rugged 0.024*** 0.014*** 0.010** 0.011** 0.014*** Homeland 0.142*** 0.106*** 0.102*** Rug x Home 0.014** African land to farm 0.151*** 0.074*** White land to farm *** Constant 0.325*** 0.304*** 0.312*** 0.304*** 0.281*** R-squared N F statistic

16 African Male Unemployment o Ruggedness consistently associated with higher levels of black male unemployment o Homelands effect only disappears when controlling for district proportions of white farmers indicating that this is a form of employment for Africans

17 OWNERSHIP: Some nonintuitive results. A priori: allegations that tribal is driving force for poor outcomes African Land Size (ha) Large Farms Reduce Unemployment Rugged 0.009** 0.011** 6 7 Homeland 0.095*** 0.099*** Rug x Home African land to farm *** Own land 0.686*** Rent land 1.858*** Share land Tribal land 0.684*** [0-0.5) [0.5-1) [1-5) [5-10) [10-20) 1.640** >= *** Constant 0.309*** 0.306***