The weak quality of education received by most poor children in South Africa places them in permanent disadvantage relative to those attending the mainly more affluent and better performing schools. This document draws from a large number of studies undertaken for a major project and summarises this evidence, which illustrating that low quality schools act as a poverty trap.

This paper examines South African wage earnings trends using all the available post-1994 household survey datasets. This allows us to identify and address the sources of data inconsistencies across surveys in order to construct a more comparable earnings time series. Taking account of the inconsistencies in questionnaire design and the presence of outliers, we fi nd that it is possible to construct a fairly stable earnings series for formal sector employees.We fi nd that claims that workers have on average experienced a substantial decrease in their real wage earnings in the post-apartheid era is based on choosing datasets on either side of Statistics South Africa's changeover from October Household Surveys (OHS) to the more consistent Labour Force Surveys (LFS), which caused a discontinuous and inexplicably large drop in average earnings. The data actually show an increase in real wage earnings in the post-transition period for formal sector employees, and does not provide strong evidence of decreasing wages in the informal economy. The paper also investigates changes in the distribution of earnings, as well as mean earnings trends by population group, gender and skill category.

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We show that reference letters from former employers alleviate information frictions in a low-skill labor market, improving applicant screening and gender equity. A resume audit study finds that using a reference letter in the application increases callbacks by 60 percent. Women drive the effect. Letters are effective because they provide valuable information about workers’ skills that employers use to select applicants of higher ability. A second experiment, which encourages job seekers to obtain and use a reference letter, finds consistent results. In particular, reference letters raise job interviews and employment for women. (JEL D83, J16, J24, J64, O12)

The fertility transition in South Africa: A retrospective panel data analysis Since 1960 South Africa has seen a steep fall in fertility levels and currently the total fertility rate is the lowest on the African continent. Given the high prevailing levels of fertility in African countries, a better understanding of the factors behind the fertility transition can be valuable not only for South Africa, but also more widely for other African countries. This paper uses the National Income Dynamics Study data to construct a retrospective panel to investigate reasons for the decline in fertility in South Africa since the 1960s. The analysis attributes a large share of the observed fertility decline across birth cohorts to improving education levels and the lower prevalence of marriage. However, a considerable segment of the transition is ascribed to the unobservables. This may include HIV/AIDS, the increased use of contraceptives and changes in both intra-household relationships and the social role of women.

In South Africa, as elsewhere, economists have not reached an agreed upon model for the Phillips curve, despite its importance for understanding the process of inflation and its relevance for policy makers. It has been a particular challenge to identify the role of aggregate economic activity in the inflationary process in the South African literature, since the breakdown of a reasonably traditional Phillips curve, which had existed until the early seventies. A comparatively new model of the Phillips curve, often called the New Keynesian Phillips Curve (NKPC), has recently received considerable interest and support from monetary economists. The South African literature is exceptional in that these models have not yet been applied locally, despite their close association with forward looking and rules-based monetary policy regimes such as the inflation-targeting regime of the South African Reserve Bank. This chapter takes a first step towards introducing the NKPC in the South African debate, by estimating standard, hybrid, and open economy versions of the model and comparing the results with the international literature as well as South African precedents. The authors find encouraging, though tentative, evidence that research along these lines might help to identify the impact of aggregate economic activity in the domestic process of inflation.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

This study has been prepared within the UNU-WIDER project on 'Discrimination and Affirmative Action: What have we learnt so far?', which is part of a larger research project on 'Disadvantaged Groups and Social Mobility'.