Does Human Capital Protect Workers against Exogenous Shocks? South Africa in the 2008-2009 Crisis

Ron Leung (), Marco Stampini and Désiré Vencatachellum ()
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Ron Leung: African Development Bank

No 4608, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The financial and economic crisis of 2008 and 2009 has taken its toll on the South African economy. The economy contracted for the first time since 1998, and entered recession during the fourth quarter of 2008. The GDP contraction was soon transmitted to the labor market. Between the second quarters of 2008 and 2009, employment fell by 3.8 percent. However, not all individuals were hit with the same intensity. Using labor force survey data unique in the African context, we find that human capital provided a buffer against the shock. After controlling for observable characteristics, education and experience showed the potential to entirely offset the effect of the recession on the likelihood of employment. This has important policy implications, as it strengthens the case for strategic investments in human capital, and helps identifying the unskilled as those with the highest need for social safety net interventions during the recession.

Keywords: emerging economies; human capital; business cycle; financial crisis; South Africa; labor markets (search for similar items in EconPapers)
JEL-codes: E3 J2 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009-12
New Economics Papers: this item is included in nep-afr, nep-dev, nep-fdg, nep-hrm and nep-lab
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Citations: View citations in EconPapers (15)

Published - substantially revised version published in: South African Journal of Economics, 2014, 82(1), 99-116

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