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Item Open Access Reservation wages, transitions from, and the duration of, unemployment in South Africa(University of the Free State, 2021) Haasbroek, Minette; Geldenhuys, Jean-PierreSouth Africa has one of the highest unemployment rates in the world, with women, youths, and people with low levels of education being especially likely to be unemployed. Most South African unemployed are also long-term unemployed. Persistently high unemployment and high long-term unemployment rates have substantial negative socio-economic implications. This study investigates the effect of reservation wages on transitions from unemployment and the duration of unemployment. Furthermore, the effects of age, education and gender on unemployment transitions and unemployment duration are also assessed. South African household survey panel data from the third (data collected in 2012) and fourth (data collected in 2014 and 2015) waves of the National Income Dynamics Study (NIDS) were used to this end. In addition to descriptive statistics (transition matrices, proportions/frequencies and means), discrete choice models (binomial and multinomial logits and probits) for unemployment transitions, as well as discrete choice models (binomial logit and probit) for unemployment duration were estimated. Discrete choice models were chosen as the appropriate method due to the nature of the available data.The descriptive statistics and the results of the discrete choice models indicated that higher reservation wages were associated with higher probabilities to transition to employment and to inactivity relative to remaining unemployed. People with higher reservation wages were less likely to be long-term unemployed. These results contradict the theoretical job search theory, a possible suggestion for this occurrence is that those that transitioned to employment had individual characteristics that justified higher reservation wages and those that transitioned to inactivity had unrealistic reservation wages given their individual characteristics. Age, education, and gender were also found to be associated with both unemployment transitions and unemployment duration. Generally, age was positively associated with transitions to employment, transitions to inactivity and long-term unemployment, indicating that older workers were more likely to become employed or become inactive relative to staying unemployed and those who remained unemployed were more likely be longterm unemployed. People with higher levels of educational attainment were more likely to transition to employment, while those with lower levels of educational attainment were more likely to transition to inactivity. While the descriptive analysis showed that those with higher levels of educational attainment were generally less likely to be longterm unemployed, this result was not evident in the duration regressions. Men were more likely to transition to employment and less likely to transition to inactivity than women. Women were more likely to be long-term unemployed. To increase transitions to employment, decrease transitions to inactivity and to decrease long-term unemployment, policymakers must target vulnerable groups like women, and the youth. Higher educational attainment, especially the completion of secondary education, may also play a critical role in helping unemployed individuals to transition to employment and lower the duration of their unemployment spells.Item Open Access Economic sustainability of small mining communities: a case study of Kathu(University of the Free State, 2021) Meggersee, Angelien; Guvuriro, S.With the global fluctuations in commodity prices and increasing costs, most mines go through periods of downscale and eventually close down. The closures lead to various negative socio-economic impacts such as higher unemployment, declining growth and increased poverty levels encountered by affected mining communities. This study explores the roles that mining companies and other key stakeholders should play in the development of local economies in order to bring about economic sustainability. The South African legislative and policy framework are scrutinised for their effectiveness in promoting economic sustainability. In addition, key factors limiting the effective implementation of developmental strategies are also identified. Local economic development is often selected as the desired developmental strategy with the aim to create jobs, improve living standards and overall contribute to the economic sustainability of the mining locality. Kathu town, located in the Northern Cape province in South Africa, was used as a case study. Various outlooks, including legal, economic, and social perspectives on the challenges the town face were obtained through the use of interviews, document analysis and memos. Using constant comparative analysis to analyse the data obtained, themes such as a weak community involvement, lack in trust, poor collaboration, poor municipal capacity and possible legislation and policy flaws emerged. The study showed efforts towards sustainable local economic development. However, these efforts might not be sufficient for economic sustainability post mine-closure. Themes in support of this finding include: first, legislation and policy frameworks are promoting growth and not planning for decline to ensure an economically sustainable town. Second, the level of Kathu town’s dependency on the mining companies remain high and the local government is not fulfilling its roles and responsibilities optimally due to the lack of capacity and funding. Third, community members are not participating or contributing to development, however, the proposal of collaborative planning might address the issue. Last, fluctuations in commodity prices and incapacity will hamper the prospects of future development. Despite the challenges hindering the economic development of Kathu town, the mining company and local municipalities realise and acknowledge the shortcomings in their efforts towards promoting economic sustainability. The study makes recommendations about improving the legislative framework and planning arrangements, and hopes to contribute to the knowledge base from which all key stakeholders will learn.Item Open Access 'n Bedryfsekonomiese ondersoek van die ontwikkeling van die Vrystaatse goudveldstreek(University of the Free State, 1966) Stockenstrom, Frederik Francois de Wit; Fourie, F. C. van N.; Fourie, PhillipAbstract not availableItem Open Access Die invloed van spoorwegtariewe op die vestiging van nywerhede in Bloemfontein(University of the Free State, 1957) Border, Thomas Going; Fourie, F. C. van N.In dealing with the subject of the influence of railway tariffs on the localization of industry in Bloemfontein, it should firstly be pointed out that South Africa has undergone extensive industrial expansion especially during the years following world war II, but, as indicated in Chapter 1, this industrial development has unfortunately been limited to a relatively few concentrated areas namely, Southern Transvaal, Western Cape, Durban Pinetown and to a lesser extent Port Elizabeth. These four regions were jointly responsible for 83,3% of the country’s net industrial production during the year 1951/52. Of these four regions Southern Transvaal is by far the most developed area, having alone been responsible for 48,9% of the Union’s total net industrial production for the same period. Bloemfontein, on the other hand, although classified as the eight most important industrial centre in the Union and after Southern Transvaal the second most important inland industrial centre, is still as an industrial centre very much less developed than more concentrated regions mentioned. The Free State as a whole was during the year 1951/52 responsible for only 3,6% of the total net industrial production. Of the total number of workers employed in industrial concerns with more than 10 employees, Bloemfontein had only 1,7% of this total during the year 1948/19. It is clearly understood that it is difficult to determine with any exactness the actual influence which railway rates exort on industrial location in general. The importance thereof must however not be underestimated as railway rates are inherent in most localization factors such as markets, raw materials, power etc. In determining the influences of railway rates on industrial localization in Bloemfontein, due consideration has been given to the other localization factors such as the proximity of a suitable local and regional market, labour supply, the availability of a sufficient supply of water and power, climate and other general factors. These were found to be generally favourable for further industrial expansion in Bloemfontein. As regards Bloemfontein as market area, it is shown that it possesses a local and regional market which although relatively small in comparison with Southern Transvaal and other concentrated areas, contains the second most important inland market, and a regional market which covers a considerable area. Although this region consists of the more sparsely populated regions of the country, it is a region on the threshold of important developments in respect of mineral deposits in the Western Free State and goldfields. There is also the growing importance of the agricultural areas of the region. It is also shown in chapter 1 that in the absence of any discrimination in railway rates, Bloemfontein’s locality is second only to the Southern Transvaal as regards the cost of distribution within the national market. It is clear that there are definite reasons which go towards making a large market region more attractive for an industrial locality such as, the immediate proximity of a large market, prompt delivery, larger possibilities for expansion, quicker adaptation to changes in demand, the presence of a sufficient labour supply, etc. It is also clear that geographical conditions such as rich mineral deposits were largely responsible for the development and extreme concentration of industries in the Southern Transvaal region, but the fact must not be overlooked that the railway tariff system played an important part assisting industrial expansion in that area. The question is, in which way and to what extent did the railway tariff system encourage this large concentration of inland development in the Southern Transvaal, or in other words to what extent did the railway tariff system reward industrial development in other inland regions, resulting in practically all the industrial development having been restricted to one specific inland region? The most important bearing which railway tariffs have on the localization of industrial enterprises can clearly be conceived from the requirements stated in the South African Act of 1909, which emphasize that the South African Railways and Harbours must be administered on business principles with proper regard to the agricultural and industrial development of the inland regions of all the provinces of the Union. By comparing the requirements of the Act with the actual pattern of inland industrial development which exists at present, one finds rightly enough a considerable inland industrial development, but unfortunately this development is largely limited to on inland region of one province only, with little or no development having taken place in other inland regions. The Railway Administration by means of their tariff system adopted a positive policy towards encouraging the expansion of distribution and industrial concerns in the inland area of the country, but the results of this policy with it’s “maximum”, “distribution” and “nearest harbor” rates, helped towards attracting industry to the Southern Transvaal only, without providing any benefit to other less fortunate inland regions such as Bloemfontein. Irrespective of opinions as to the influence which the South African Railway tariffs have had on the siting of the country’s industries, the fact remains that the country’s extremely centralized industrial development occurred together with a railway rates policy which was extremely discriminatory in it’s application. For this reason also special attention has been given in this study to these discriminating aspects of the previous railway rates system, and their influences on the localization of the country’s industries. Attention is also given to the probably future influence as a result of the abandoning of these discriminating rates and complete revision of the previous rates policy in August 1954. It is found generally that as a result of the higher railway rates on manufactured articles than on the raw materials, the tendency exists to locate industries as near as possible to existing market areas. Considering this tendency together with the fact that the Southern Transvaal is by far the most important national market area, it would only be natural to expect that any railway rates policy which discriminates in favour of this region would only go towards attracting still further industrial expansion within this area. On careful examination of the South African Railway rates, especially those in operation before August 1954, one finds that industries in the Southern Transvaal were not only located within the country’s most important national market, but were also placed within reasonable distance from the other inland and coastal markets as a result of a discriminating rates policy. The distribution rates had the effect of halving the schedule rate, and thus of halving the transport distance in terms of railway rates, from declared distribution centres to other centres in the inland area. This policy also resulted in a considerable decrease in the rate on goods forwarded from distribution centres in the inland area to destination stations in the coastal area (in the instance the difference was taken between the schedule rate from the forwarding station to the harbor nearest to the destination station and the port rate from the destination station to that harbor.) The nearest harbor rate which applied to products of South African manufacture forwarded directly from the place of manufacture, had an even wider effect in that the actual distance between the forwarding and destination stations was not taken into account (except in applying a minimum rate which was considerably lower than the schedule rate), but the distance for rates purposes was that from the destination station to it’s nearest harbor, in cases where this mileage was less than the distance which the goods had to be transported. The reason for these rates was to enable the inland manufacturer to compete favourably with the imported article, but had the effect that a locally manufactured article forwarded for example, from Bloemfontein to Queenstown (distance of 248 miles) was charged the same rate as a similar article manufactured in and forwarded from Johannesburg to Queenstown, which is a distance of more than double that of Bloemfontein to Queenstown. The actual transport distance was also considerably reduced for rates purposes as a result of the application of maximum rates on certain products, such as coal. A further discriminatory aspect which still exists in the published harbour rates, is to be found in the harbour rates between stations in the Southern Transvaal and the ports of Buffalo Harbour and Algoa Bay. These harbour rates in respect of received and forwarded traffic place certain centres in this region approximately 170 miles nearer to Buffalo Harbour and approximately 210 miles nearer Algoa Bay. These different aspects of the Railway rates policy placed industries in the Southern Transvaal in an exceptionally favourable position for the distribution of their products to other market centres in the country, and acted as a strong incentive for industrial localization in that area, but unfortunately on the other hand it seriously handicapped the industrial development of other inland regions such as Bloemfontein. It is thus to be expected that since the major discriminatory aspects of the previous rates policy have been abandoned, conditions will be more favourable for the industrial expansion in Bloemfontein.Item Open Access The impact of a change in monetary policy by means of a monetary macro-econometric model(University of the Free State, 2001) De Jager, Shaun; Wessels, G. M.; Pretorius, A. M.Monetary policy essentially reflects monetary theory. As the financial system is complex and intricate in nature, it becomes virtually impossible to conceive without a theory to simplify its structure. This simplified structure should ideally be geared towards the generation of a transparent financial environment in order to enhance the effectiveness of monetary policy initiatives. To this end, a new monetary policy framework was adopted by the SARB in the year 2000, and is based on achieving a pre-determined inflation target over a specific period of time. The mission of the SARB to protect the value of the domestic currency hence remains the primary objective of the monetary authorities, and any assistance in increasing the transparency of the Bank's monetary policy initiatives will no doubt increase the overall effectiveness of monetary policy. Inflation basically remains a monetary phenomenon and the rates of growth in domestic money supply and bank credit extension are important factors in the new inflation targeting environment. Accordingly, the Bank's actions are aimed at adjusting the repo rate to influence economic expansion and the demand for credit. It is essentially for this purpose that the monetary macro-econometric model has been estimated in this study, and furthermore to elucidate the links between the financial and real sectors of the economy. The model has been structured to reflect money demand theory and how the various domestic economic agents interactively react to a monetary policy impulse. Various alternative monetary policy simulations were performed on the model to determine if the model was robust, and whether it suitably reflected the intricate links between the various key sectors of the economy. The results of the model suggested that it was stable and suitable for policy simulation purposes, and that the monetary transmission mechanism in South Africa is fairly long. In addition, it was found that there was a close relationship between real economic activity and inflation, while the lagged impact on real output growth from a hypothetical change in interest rates was approximately one year. The primary objective of the newly adopted inflation targeting framework is to achieve price and financial market stability over the long-term. As this framework is of a forward-looking nature, it becomes imperative to realise that monetary policy initiatives taken now, will result in (or influence) the possible outcome of the future. This process will even more importantly determine whether the SARB will achieve its inflation target or not. However, the sole purpose of this study was to develop a model that suitably illustrates the key links in the transmission mechanism, and not specifically to determine a model geared towards forecasting the future rate of inflation. The structure and theoretical foundation of the model is not a guarantee for successful monetary policy implementation, but its importance in illustrating the links between the key sectors of the economy cannot be denied. This characteristic makes the model a useful tool in the wide arsenal of operational instruments at the Bank's disposal, and in the process induces an environment in which the monetary policy implementation process becomes more transparent. Afterall, it is the credibility and transparency of the monetary authority that enhances the various stake holders ability to interpret the signalling intentions of the central bank, and it is this that ultimately determines the effectiveness of monetary policy.Item Open Access Die invloed van die goudmyne op die ekonomiese aktiwiteite van enkele dorpe aan die Oosrand vir die tydperk 1930 tot 1970(University of the Free State, 1979) Kriek, Henry Rudolph; Van Zyl, J. S.Afrikaans: 'n Stad kan as die ruimtelike konsentrasie van werkende inwoners as gevolg van sekere ekonomiese aktiwiteite wat plaasvind, omskryf word. In die substreek van Benoni, Boksburg, Brakpan en Springs was goud die stimulerende aktiwiteit wat kapitaalbeleggings en arbeid gelok het, en waardeur verskeie belangrike markte totstand gekom het. As gevolg daarvan dat die goudmynbedryf baie winsgewend was, het verdere uitbreiiings voortdurend plaasgevind en was terugwaartse en voorwaartse skakeleffekte voordelig vir die ekonomie, veral in dié sin dat nywerhede totstand gekom het om in die behoeftes van die goudmyne te kon voorsien. Groter indiensneming het gevolg en die verdienstes van die werknemers het 'nl groter vraag na verbruikersgoedere geskep waardeur die betrokke markte en nywerhede gestimuleer was. Hierdie kumulatiewe proses het hand aan hand gegaan met die voordele verbonde aan skaalekonomieë. Bewus van die feit dat die goudmynbedryf 'n verdwynende bate is, het die Suid-Afrikaanse regering sedert 1925 met 'n doelbewuste beskermingsbeleid vir plaaslike nywerhede voor die dag gekom. Dit, sowel as die voorspoedtydperk wat op die goudmyne na die devaluasie van die Suid- Afrikaanse pond op 31 Desember 1932 gewag het, het nywerheidsvestiging gestimuleer. Die invloed van die Tweede Wêreldoorlog wat 'n skaarste aan, en gevolglik 'n prysstyging van, verbruikersgoedere laat ontstaan het, was 'n verdere bydraende faktor tot industrialisasie. Ten spyte daarvan dat die goudmyne in die substreek hul toppunt in 1940 bereik het, het hulle toe alreeds lank genoeg bestaan dat voortgesette streeks-ekonomiese groei, as gevolg van die vermenigvuldiger effek, in die na-oorlogse jare kon voortgaan. Die nywerheidsontwikkeling se bydrae het met die verloop van tyd belangriker as dié van die kwynende uitgewerkte myne se bydrae tot die substreek se groei geword. Die goudmyne het egter nog die buitelandse valuta verdien waarmee masjinerie, en soms ook grondstowwe, vir die fabrieke aangekoop was. Baie potensiële nyweraars het eers na die uitbreek van die Tweede Wêreldoorlog van Suid-Afrika se nywerheidsmoontlikhede bewus geword, en dit het 'n kumulatiewe effek gehad. Nywerhede was meesal in bestaande dorpe gevestig en kon die bestaande fasiliteite soos watertoevoer, elektriesekrag, paaie, spoorlyne, riolering, behuising, ensovoorts, benut. Fabriekswese is verder in die voorsiening van kapitaal deur staatskorporasies aangehelp. As gevolg van die goudmynbedryf het daar oor die jare 'n groot verbruikersmark in die substreek totstand gekom. Dit het veral fabrieke wat mark-georienteercle artikels vervaardig, gelok. Ten spyte daarvan dat die goudmyne algaande gesluit het, het daar geen ontvolking of werkloosheid gevolg nie, omdat die nywerhede algaande meer werkgeleenthede gebied net. Die plaaslike owerhede van die dorpe in die substreek het gunstige voorwaardes aan moontlike nyweraars gebied om hulle te oorreed om hulle in die dorpe te kom vestig. Hierdie aanmoediging het gunstige reaksie uitgelok en die groei van die dorpe was algou nie meer van die goudmynbedryf afhanklik nie. Dorpsontwikkeling in die vorm van nywerheidsgebiede sowel as residensiëlegebiede het voortgeduur in ooreenstemming met die groter vraag daarna. Die aanvanklike basiese kapitaalbeleggings in die goudmyne van die substreek, sowel as die loonverdienste het as basis gedien vir die ontstaan en ontwikkeling van die ekonomiese aktiwiteite van die dorpe. Op grond hiervan, en die opbou van die infrastruktuur gedurende die eerste fase van ontwikkeling, het die industrialisasiefase makliker bereikbaar geword veral as gevolg van die kumulatiewe effek wat dit op markverruiming gehad het. Elke suksesvolle fase van nywerheidsuitbreiding verhoog inkomste en die stedelike bevolking, en dit stimuleer verdere uitbreiding. Die dorpe moes dienste soos behuising, onderwys, water, elektriesekrag, ensovoorts voorsien, en as gevolg van die vraag daarna, het hulle bly groei. Die waarde van hierdie studie lê daarin dat dit leiding aan ander myndorpe kan gee met betrekking tot hul toekomstige, groei en ontwikkeling.Item Open Access The social discounting task in economic experiments: a validation in the field and in the lab(University of the Free State, 2016) Moloi, Tshepo Godfrey; Booysen, FrederikAltruism is one of the single most important social preferences driving human behaviour. In Psychology experiments, the Social Discounting Task is employed as a measure of directed altruism. A conventional laboratory experiment was conducted with 117 undergraduate students at the University of the Free State, with students randomly assigned to complete the un-incentivized and incentivized Social Discounting Task. The aggregated results exhibit an inverse relationship between social distance and altruism in accordance with the 1/d law of giving. Multiple regression results show that incentivising of the Social Discounting Task does not matter. Results in this dissertation also suggest that family members are more altruistic towards each other as are those exhibiting greater intergenerational solidarity. Social development programmes that can strengthen families and foster intergenerational solidarity may therefore enhance altruism within the family, thus contributing to greater wellbeing.Item Open Access The relationship between social capital welfare and health in South Africa(University of the Free State, 2005) Von Maltitz, Michael Johan; Booysen, F. le R.This paper is concerned with identifying the effects that seven different categories of network social capital (church groups, financial groups, production groups, private interest groups, service groups and political groups) have on household welfare and poverty, as well as individual self-rated health, as measured at the individual-, household- and community-level. Econometric techniques are employed for this purpose, using household- and individual-level panel data from the KwaZulu-Natal Income Dynamics Study (KIDS). The findings show that various social capital network types affect welfare, poverty and health positively. In particular, higher levels of household financial social capital lead to higher welfare levels among the poor (but not the poores t of the poor), and household service and political social capital cause higher welfare among households in general. Households with more financial and political group social capital are also less likely to be poor, and chronically poor. Individual financial group social capital also raises individual health levels, while better health levels result in increase d service group memberships. Thus, policies aimed at building network social capital, not only among the poor but among households in general, may be particularly useful in achieving poverty alleviation and improvements in health status, including current policies of the Department of Social Development.