Coping with Intrahousehold Job Separation in South Africa’s Labor Market

Zoë M. McLaren

Economic Development and Cultural Change, 2019, vol. 67, issue 4, 757 - 798

Abstract: Households employ many strategies to cope with exposure to risk. Using South African panel data in an event study methodology, this paper examines household strategies for coping with reductions in income following a job separation. After a job separation, household employment transitions increased by 22.5 percentage points, driven mainly by the nonsearching unemployed. Households became financially worse off and were significantly more reliant on savings and remittances. My results suggest that involuntary unemployment is an important cause of persistently high unemployment in South Africa. Addressing structural factors in the labor market will enable households to limit negative repercussions of income shocks.

Date: 2019
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