Exposure to violence and earnings: Examining the causal effect for young South Africans
Abstract / Description:
Young people in South Africa are disproportionately at risk of being exposed to violence compared to adults. Given the scale of violent crime in South Africa, we expect the disproportionate exposure of young South Africans to violence to have an impact on their educational and social outcomes and therefore their earnings potential. Due to data constraints and econometric challenges, there is very little research on the impact of exposure to violence on individual earnings. In this paper we address the shortcoming of the existing literature by using the Cape Area Panel Study to: (i) estimate baseline regressions on the impact of exposure to violent crime on earnings for young people in Cape Town; and (ii) apply a neighbourhood fixed effects approach to control for any unobserved measures of neighbourhood disadvantage that might be correlated with exposure to violence and low earnings for young people. In the baseline results, several (self-reported) measures of exposure to violence are significant and the negative effect on earnings is large. In the fixed-effects estimations, where statistics on violent crime by neighbourhood are used, the effect remains significant for several types of violent crime, but is substantially smaller. Refreshments will be served.