Working Paper 907
The concept of creative destruction emphasizes how the turnover of businesses and workers drives innovation, productivity gains and aggregate economic growth, even as individual firms and employees experience disruption. This article leverages administrative tax data for South Africa that measures flows rather than stocks, enabling a dynamic analysis of labour and firm adjustments. Our findings reveal unexpectedly high levels of churn in both jobs and business establishments, suggesting fluid rather than rigid markets. However, job and business creation mirror destruction, resulting in low net growth. Moreover, sectoral shifts over time have not increased the share of tradables, implying that structural transformation has stalled.
Keywords: creative destruction, job creation, job destruction, job reallocation, job turnover, firm turnover, firm entry, firm exit, structural transformation, urban labour markets, South Africa
by 