Essays in spatial and labour economics

Abstract

This thesis is comprised of three independent chapters on topics in spatial, labour and development economics. I focus on South Africa for which there is a rich and under-exploited set of micro-data and where the peculiar history of the country - including restricted migration and separate development along race lines - makes for a particularly interesting setting. The first chapter provides some of the first evidence on the labour market impacts of female internal migration. Merging detailed migration data from censuses and labour market data from labour force surveys, I exploit substantial time-variation in female migrant inflows into over 200 districts. To identify causal effects, I make use of the unique history of South Africa to construct a plausibly exogenous shift-share instrument for female migrant concentration based on earlier male migration flows from reserves during the Apartheid period. I find that this migration increases the employment and hours worked of high-skilled women (due to substitution in household work) and leads to a reduction in the employment of low-skilled female non-migrants (due to increased competition). The second chapter examines how minimum wage legislation influences the labour market impacts of productivity shocks. Merging district-level high resolution weather data with high frequency data from South Africa’s labour force survey, I examine how the introduction of an agricultural minimum wage affects resilience to weather shocks in the short term using a difference-in-differences approach. I find strong evidence that the substantially increased (and inflexible) wage bill after the minimum wage law leads agricultural employers to retrench formally employed workers in the wake of negative shocks (whereas agricultural employment was more resilient in the pre-law period). In the third and final chapter, I estimate the magnitude of agglomeration externalities in South Africa using a unique geo-coded panel micro-dataset where workers are tracked as they move across the country. The few studies on developing countries to date have estimated much higher agglomeration elasticities than those found in developed countries, but these studies have generally been unable to control for sorting on unobservables or to work with the ideal geographic units. Employing individual fixed effects and an instrumental variable constructed from a novel dataset on historical population settlements, my preferred estimate for regional wage elasticity is approximately 0.03 - in line with estimates for developed countries.