Paul L. Cichello

For Richer or for Poorer ? Evidence from Indonesia, South Africa, Spain, and Venezuela

We analyze household income dynamics using longitudinal data from Indonesia, South Africa (KwaZulu-Natal), Spain and Venezuela. In all four countries, households with the lowest reported base-year income experienced the largest absolute income gains. This result is robust to reasonable amounts of measurement error in two of the countries. In three of the four countries, households with the lowest predicted base-year income experienced gains at least as large as their wealthier counterparts. Thus, with one exception, the empirical importance of cumulative advantage, poverty traps, and skill-biased technical change was no greater than structural or macroeconomic changes that favored initially poor households in these four countries.

Household Income Dynamics: A Four-Country Story

In this article, we analyse the dynamics of household per capita incomes using longitudinal data from Indonesia, South Africa, Spain and Venezuela. We find that in all four countries reported initial income and job changes of the head are consistently the most important variables in accounting for income changes, overall and for initially poor households. We also find that changes in income are more important than changes in household size and that changes in labour earnings are more important than changes in other sources of household income.

Child Fostering and Human Capital Formation in KwaZulu-Natal: An Economist's Perspective

Abstract Twenty-two percent of all African children under eighteen years old in KwaZulu-Natal are fostered children. This paper first describes how economists typically analyze the institution of child fostering. Next, a standard economic model of child fostering (by Zimmerman) is modified to better allow for the possibility of the under-provision of human capital inputs to fostered children. Taking advantage of panel data from the KwaZulu-Natal Income Dynamics Study (KIDS), a preferred measure of human capital accumulation is constructed and used to re-examine the impact of child fostering on educational investments. Similar to Zimmerman, there is little evidence of a “Cinderella” effect for those fostered to close relatives. However, evidence here casts doubt on any sustained negative impact for those fostered to distant relatives, despite verifying lower 1993 enrollment rates for these children. Additionally, initial evidence does not support the strong migration effect posited by Zimmerman. Some potential pitfalls to this new approach are also discussed.

Escaping From Poverty: Household Income Dynamics in Indonesia, South Africa, Spain, and Venezuela

Opponents of free trade argue that in today’s global economy, unfettered access to foreign capital, technology, and goods primarily benefits a well-connected and highly skilled elite, to the exclusion of the poor, voiceless majority. Are the rich getting richer at the expense of the poorer?

Are African workers getting ahead in the new South Africa? Evidence from KwaZulu‐Natal, 1993–1998

Excerpt] In this paper, we use the KIDS panel data to answer three questions about the ‘progress’ of African workers in this one province in post-apartheid South Africa. First, how have African workers progressed as a group? Secondly, which African workers have progressed the most, and by how much have they progressed? Thirdly, to what extent is the progress made by workers driven by transitions between employment and unemployment, or between informal and formal sector employment? We reach the following major findings. First, African workers in KwaZulu-Natal had quite diverse experiences, but experienced positive progress on average. Second, those who progressed the most during the 1993 to 1998 period were individuals who started the least well off. This is a surprising conclusion given the kinds of evidence produced from cross-sectional data. Transitions between employment and unemployment and between formal and informal employment have a strong impact on real earnings, but these real earnings changes are not always as we might expect. Additionally, the sizeable changes that take place for those who do not experience such an employment transition implies that dynamics within sectors also deserve attention. A more technical analysis, complete with a variety of caveats, can be found in a Report to the Ministry of Finance (Cichello, Fields and Leibbrandt, 2001). The purpose of this article is to share these findings at a less technical level and to highlight the necessity of panel data in answering these questions.