Labour markets and agglomeration : the urban rat race in South Africa

Abstract

This study focuses on testing for the existence of an urban rat race within urban South Africa by investigating the relationship between agglomeration and hours worked in the South African labour market. This dissertation follows the work of Rosenthal and Strange (2002), who find evidence that industrious professionals are drawn to agglomerated areas and that agglomeration increases the amount of hours worked, thus supporting Akerlof?s (1976) theory of the urban rat race. Using cross–sectional data from the September 2007 Quarterly Labour Force Survey, Ordinary Least Squares (OLS) regressions were run using the log of hours worked as dependent variable and different worker attributes, dummy variables and agglomeration variables as explanatory variables in order to establish a relationship between agglomeration and hours worked in the urban areas of South Africa. Findings from the empirical analysis yield atypical results concerning the relationship between worker characteristics, agglomeration and hours worked in South Africa. Overall, results indicate that a workspreading effect occurs amongst professional workers, whilst non–professional workers appear to work the longest hours in South Africa.