Dissecting post-apartheid labour market developments: Decomposing a discrete choice model while dealing

The household level data (chiefly the PSLSD and the 1994 OHS) were criticised on the grounds of coverage and the definitions of unemployment. [...] Given the OLS estimates bt of βt the sample means will obey the relationship yt = xtbt (2) Consequently the change in sample means from period t to period s can be decomposed as yt − ys = xt (bt − bs) + (xt − xs)bs (3) where the first term shows the impact of changing the coefficients and the second term the impact of changes in the covariates. [...] In these cases being able to model separately the impact of changes in the coefficients, changes in the characteristics and changes in the distribution of the error terms might potentially be useful. [...] Turning to the results in table 4 we present in the first column (labelled β) the counterfactual proportion if the 2004 sample was given the coefficients applying in 1995. [...] It is noticeable that the 2004 figures tend to lie right at the bottom of this band, which suggests that the propensity to be measured to be employed is lower in the 2004 data sets than in the others.