Early life shock and labour market outcomes: Panel data evidence from South Africa

Abstract

Adverse life events have short- and long-term effects on the livelihood of victims. This paper studies the effect of early life idiosyncratic shocks on labour market outcomes using five rounds of panel data from the National Income Dynamics Study (NIDS) of South Africa. Regression results from alternative panel data estimators suggest that the loss of biological parents early in life is negatively associated with the likelihood of employment and wage earnings. The association is stronger when one loses one's biological mother than one's biological father. Heterogeneity analysis reveals that the loss of a biological father among Black South Africans leads to higher wage earnings compared to other race groups who have experienced the same shock. Education level, perceived health, cognitive ability, and occupation type are strongly associated with the loss of a biological mother, while only education is associated with the loss of a father. These could be the main channels that mediate the link between early life loss of biological parents and labour market outcomes. Therefore, strengthening and aligning child support programmes to reach the victims are required.

Keywords

• CODES
• I12
• I26
• J21
• J31
• O15