Abstract
This paper uses the the Cape Area Panel Study (CAPS), a longitudinal survey of young people in Cape Town, to analyze the impact of short-term household economic shocks on the schooling outcomes of South African youth. In addition to detailed information on schooling and employment, CAPS has collected information on negative shocks experienced by households, including job loss, business failure, theft, property damage, and death of household members. The CAPS panel data allow us to prospectively follow young people as they progress through secondary school, looking at the impact of both initial conditions and household shocks that occur between waves. We follow about 1000 CAPS respondents who were in grade 8 or 9 in 2002. Our results indicate that youth households that experience a negative shock are 12 percentage points less likely to advance three grades between 2002 and 2005.
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