Formal-informal economy linkages and unemployment in South Africa:

South Africa's high involuntary unemployment and small informal sector are attributed to an underperforming formal sector and barriers to entry in the informal sector. This paper examines the economywide linkages between the formal and informal economies while accounting for different types of informal activities. A multiregion empirically calibrated general equilibrium model is developed capturing both product and labor markets. Three policy options are considered. First, results indicate that trade liberalization reduces national employment. At the same time, it increases formal employment, hurts informal producers, and favors informal traders, who benefit from lower import prices. Past liberalization may, therefore, partly explain South Africa's small informal sector and its concentration among traders rather than producers. Second, wage subsidies on low-skilled formal workers increase national employment but hurt informal producers by heightening competition in domestic product markets. This suggests that it is insufficient to examine unemployment policies by focusing only on labor markets. Third, unconditional cash transfers stimulate demand for informally produced products, thereby raising informal employment without undermining formal producers. The transfer does, however, place a large fiscal burden on the state and is less effective at reducing national unemployment than a wage subsidy. Overall, these findings underline the importance of distinguishing between the formal and informal sector implications of socioeconomic policies.informal economy, involuntary unemployment, formal economy, labor markets, trade liberalization, national employment, Cash transfers, wage subsidy, Computable general equilibrium (CGE) modeling, Development strategies,

Associative memory in gene regulation networks

The pattern of gene expression in the phenotype of an organism is determined in part by the dynamical attractors of the organism’s gene regulation network. Changes to the connections in this network over evolutionary time alter the adult gene expression pattern and hence the fitness of the organism. However, the evolution of structure in gene expression networks (potentially reflecting past selective environments) and its affordances and limitations with respect to enhancing evolvability is poorly understood in general. In this paper we model the evolution of a gene regulation network in a controlled scenario. We show that selected changes to connections in the regulation network make the currently selected gene expression pattern more robust to environmental variation. Moreover, such changes to connections are necessarily ‘Hebbian’ – ‘genes that fire together wire together’ – i.e. genes whose expression is selected for in the same selective environments become co-regulated. Accordingly, in a manner formally equivalent to well-understood learning behaviour in artificial neural networks, a gene expression network will therefore develop a generalised associative memory of past selected phenotypes. This theoretical framework helps us to better understand the relationship between homeostasis and evolvability (i.e. selection to reduce variability facilitates structured variability), and shows that, in principle, a gene regulation network has the potential to develop ‘recall’ capabilities normally reserved for cognitive systems

Adaptation without natural selection

Document is itself an extended abstract

Measuring the carbon intensity of the South African economy

We estimate the carbon intensity of industries, products, and households in South Africa. Direct and indirect carbon usage is measured using multiplier methods that capture inter-industry linkages and multi-product supply chains. Carbon intensity is found to be high for exports but low for major employing sectors. Middle-income households are the most carbon-intensive consumers. These results suggest that carbon pricing policies (without border tax adjustments) would adversely affect export earnings, but should not disproportionately hurt workers or poorer households. 7per cent of emissions arise though marketing margins, implying that carbon pricing should be accompanied by supporting public policies and investments

If you can't be with the one you love, love the one you're with: How individual habituation of agent interactions improves global utility

Simple distributed strategies that modify the behaviour of selfish individuals in a manner that enhances cooperation or global efficiency have proved difficult to identify. We consider a network of selfish agents who each optimise their individual utilities by coordinating (or anti-coordinating) with their neighbours, to maximise the pay-offs from randomly weighted pair-wise games. In general, agents will opt for the behaviour that is the best compromise (for them) of the many conflicting constraints created by their neighbours, but the attractors of the system as a whole will not maximise total utility. We then consider agents that act as 'creatures of habit' by increasing their preference to coordinate (anti-coordinate) with whichever neighbours they are coordinated (anti-coordinated) with at the present moment. These preferences change slowly while the system is repeatedly perturbed such that it settles to many different local attractors. We find that under these conditions, with each perturbation there is a progressively higher chance of the system settling to a configuration with high total utility. Eventually, only one attractor remains, and that attractor is very likely to maximise (or almost maximise) global utility. This counterintutitve result can be understood using theory from computational neuroscience; we show that this simple form of habituation is equivalent to Hebbian learning, and the improved optimisation of global utility that is observed results from wellknown generalisation capabilities of associative memory acting at the network scale. This causes the system of selfish agents, each acting individually but habitually, to collectively identify configurations that maximise total utility