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Wage premia and wage differentials in the South African labour market

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  • Haroon Bhorat

    ()
    (Development Policy Research Unit, University of Cape Town)

Abstract

Abstract: The aim of this paper is to highlight wage trends and patterns in the South African labour market through examining wage premia and wage differentials. The analysis utilises data from the October Household Survey of 1995. Findings show that the regular race, gender and educational differentials arise when looking at median wages, with the racial wage gap being more severe than the gender wage gap. One of the key reasons for the racial wage differential, specifically between that of Africans and Whites, is the higher rate of return on education for White workers. The higher rates could be due to unofficial discrimination; a perception that degrees from historically white universities are of a higher quality than degrees from historically black universities; and the accumulation of human capital by White workers in areas of high demand by firms. There also appears to be a racial wage cleavage between Africans and Coloureds on the one hand and Asians and Whites on the other. Significant wage premia exist for skilled workers in the labour market and these are borne out in the percentile differentials of race, gender and education. Sectoral wage data show that high skills-intensive sectors yield higher levels of wage inequality than low skills-intensive sectors. Findings from a tentative international comparison show that, relative to most developed countries, South Africa has high levels of wage inequality.

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File URL: http://www.dpru.uct.ac.za/sites/default/files/image_tool/images/36/DPRU%20WP00-043.pdf
File Function: First version, 2000
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Bibliographic Info

Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 00043.

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Length: 26 pages
Date of creation: Oct 2000
Date of revision:
Publication status: Published in Working Paper Series by the Development Policy Research Unit, October 2000, pages 1-26
Handle: RePEc:ctw:wpaper:00043

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Related research

Keywords: South Africa: wage inequality; wage trends and patterns; wage premia and wage differentials;

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References

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  1. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
  2. Murray Leibbrandt & Haroon Bhorat, 1999. "Modelling Vulnerability and Low Earnings in the South African Labour Market," Working Papers 99032, University of Cape Town, Development Policy Research Unit.
  3. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  4. H. Bhorat & J. Hodge, 1999. "Decomposing Shifts in Labour Demand in South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 67(3), pages 155-168, 09.
  5. Haroon Bhorat, 2000. "The impact of trade and structural changes on sectoral employment in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 17(3), pages 437-466.
  6. Murray Leibbrandt & Haroon Bhorat, 1999. "Correlates of Vulnerability in the South African Labour Market," Working Papers 99027, University of Cape Town, Development Policy Research Unit.
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Citations

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Cited by:
  1. Steve F Koch & Ssekabira Ntege, 2008. "Returns to Schooling: Skills Accumulation or Information Revelation?," Working Papers 87, Economic Research Southern Africa.
  2. Malcolm Keswell & Laura Poswell, 2004. "Returns To Education In South Africa: A Retrospective Sensitivity Analysis Of The Available Evidence," South African Journal of Economics, Economic Society of South Africa, vol. 72(4), pages 834-860, 09.
  3. Paul Cichello & Gary Fields & Murray Leibbrandt, 2003. "Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal," Working Papers 03077, University of Cape Town, Development Policy Research Unit.
  4. Damian Hattingh & James Hodge & Sandrine Rospabé, 2003. "The Impact of Privatisation and Regulatory Reform on Wage Premia in State-Owned Enterprises in South Africa," Working Papers 03078, University of Cape Town, Development Policy Research Unit.

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