Inequality Traps and Human Capital Accumulation in South Africa

Miquel Pellicer and Vimal Ranchhod

No 86, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town

Abstract: We consider the interaction between human capital accumulation and inequality in South Africa. We start by discussing three alternative theoretical frameworks that relate inequality and investment decisions in post-secondary education; namely the 'perfect credit markets hypothesis', the 'imperfect credit markets hypothesis' and the 'social externalities hypothesis'. Each of these suggests different policy implications. We then consider which of these seems to have the most validity in the South African context, by presenting some original analysis as well as considering some of the related literature. Our findings suggest that South Africa is indeed in an 'inequality trap' situation and that credit markets do not work well. There is some evidence that social externalities compound the effects of the imperfect credit markets. We conclude with a discussion of possible policy directions. These include information on eligibility to tertiary institutes of education, awareness campaigns regarding public financing options, subsidization of application and registration fees and efforts to improve school quality at the primary and secondary levels.

Keywords: Nids; Data (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-afr, nep-dev and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://opensaldru.uct.ac.za/bitstream/handle/11090/177/2012_86.pdf?sequence=1 Full text (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ldr:wpaper:86

Access Statistics for this paper

More papers in SALDRU Working Papers from Southern Africa Labour and Development Research Unit, University of Cape Town Contact information at EDIRC.
Bibliographic data for series maintained by Alison Siljeur ().