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Wage effects of unions and industrial councils in South Africa

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  • Kristin F. Butcher
  • Cecilia Elena Rouse

Abstract

Using data for 1995, the authors estimate union wage premia of about 20% for African workers and 10% for white workers-fairly close to similar estimates reported for other countries, including the United States. African nonunion workers who were covered by industrial council agreements received a premium of 6-10%; the premium was positive but not statistically significant for whites. Although the union/nonunion wage gap was smaller inside the industrial council system than outside it for Africans, the total union premium for union members covered by an industrial council agreement was similar to the union premium outside the industrial council system. Among Africans, the industrial council and union wage gaps were largest among low-wage workers. These findings, the authors conclude, do not support the common claim that a high union wage premium and the industrial council system are important causes of inflexibility in the South African labor market. (Author's abstract.)

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 54 (2001)
Issue (Month): 2 (January)
Pages: 349-374

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Handle: RePEc:ilr:articl:v:54:y:2001:i:2:p:349-374

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  1. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, American Economic Association, vol. 70(3), pages 474-75, June.
  2. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  3. T. Paul Schultz & Germano Mwabu, 1998. "Labor unions and the distribution of wages and employment in South Africa," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
  4. Aigner, Dennis J., 1973. "Regression with a binary independent variable subject to errors of observation," Journal of Econometrics, Elsevier, Elsevier, vol. 1(1), pages 49-59, March.
  5. Moll, Peter, 1996. "Compulsory Centralization of Collective Bargaining in South Africa," American Economic Review, American Economic Association, American Economic Association, vol. 86(2), pages 326-29, May.
  6. Rosen, Sherwin, 1969. "Trade Union Power, Threat Effects and the Extent of Organization," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 36(106), pages 185-96, April.
  7. Harry C. Katz, 1993. "The decentralization of collective bargaining: A literature review and comparative analysis," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(1), pages 3-22, October.
  8. Daniel Sullivan, 1989. "Monopsony Power in the Market for Nurses," NBER Working Papers 3031, National Bureau of Economic Research, Inc.
  9. Stephan Klasen & Ingrid Woolard, 1999. "Levels, trends and consistency of employment and unemployment figures in South Africa," Development Southern Africa, Taylor & Francis Journals, Taylor & Francis Journals, vol. 16(1), pages 3-35.
  10. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, Econometric Society, vol. 45(1), pages 1-22, January.
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  1. To understand earnings in Africa, we need to look past the formal/informal divide
    by Andrew Kerr in The CSAE Blog on 2012-06-01 11:47:25
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