There are many avenues by which parents can help their children succeed in the labor market. For example, a parent can invest in his childos education, he can provide money to defray search costs, or he can endow his child with a genetic code that is more or less suited to the current labor market. Of course, society bears the costs of these intergenerational correlations through reduced mobility; one childos advantage in getting a job is anotheros disadvantage. The intergenerational correlations literature has sought to quantify the importance of these sorts of effects for over a century, both through isolating individual effects and in total. One avenue which has long been mentioned (since at least Becker and Tomes 1979) but remains unquantified is the importance of parents as network members.
That is, parents can provide children with social capital in the form of job information or references which grant an advantage in the labor market much as inherited wealth can. In part, this neglect is practical: these studies have been primarily concerned with lifetime outcomes, like permanent income, for which networks can not be separated from correlated individual fixed effects, such as preferences, genetic and wealth endowments, and educational investment. However, another reason may be the contexts of these papers rnearly all of the literature is set in the US or Europe, where unemployment is low enough, and labor markets are competitive enough, that having a parent who represents a good employment connection seems far less likely to be important than the human capital which he invests in you.
South Africa represents a different context, which is more relevant for many developing countries. Unemployment is severe, especially for the majority black population. Depending on the definition used, between 16 and 28% of prime age males are unemployed (between 19% and 33% for blacks). Unlike in other countries with similarly high offi cial statistics, there is no substantial informal sector or subsistence agriculture to engage unemployed adults, so these numbers represent ptruequnemployment. Further, while unemployment has remained high in South Africa since at least the late 1970s, the distribution of the unemployment has changed substantially since the fall of Apartheid.
In particular, unemployment durations have become much longer, suggesting that society is very immobile for the unemployed. This decline in mobility seems especially surprising given the increase in de jure economic opportunity available to non(whites after Apartheid ended. At the same time, education has become a weaker predictor of employment, suggesting that changes in the distribution of human capital have not caused this change in persistence. Legal changes associated with the end of Apartheid created a shift in the regime allocating jobs, and anecdotal evidence suggests that networks are now governing job allocation. What is unclear is whether this regime shift could have led to the observed decline in mobility.
Download
Intergenerational Networks, Unemployment, and Persistent Inequality in South Africa
