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Achieving Employment Equity in the Public Service: a study of changes between 1995 and 2001

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  • Tahir Abdi
  • Lawrence Edwards

    ()
    (School of Economics, University of Cape Town)

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    Abstract

    Significant declines in employment have coincided with trade liberalisation in South Africa stimulating many debates on possible causal relationships between the two. Existing research has, however, focussed on explaining employment trends rather than changes in the relative wage of less skilled to skilled labour. Further, the role of technology in influencing relative wages has been neglected. This paper draws upon standard international trade theory and analyses the relationship between trade, technology, factor supplies and the relative wage of less skilled workers in South Africa since 1970. The econometric results are in general weak. Nevertheless, a number of conclusions can be reached. Firstly, the rise in relative wage of less skilled workers since the early 1970s and into the 1990s is inconsistent with the view that trade liberalisation and skill biased technological change lie behind the dramatic decline in less skilled employment since the early 1980s. Secondly, there is weak evidence that tariff reductions and improvements in the real effective exchange rate have improved the relative wage of less skilled labour. Although the rise in relative wage of less skilled labour is consistent with these changes, the decline in employment of less skilled labour is not. These results suggest that the reason for the decline in employment of less skilled labour lie in other areas such as the labour market.

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    File URL: http://www.dpru.uct.ac.za/sites/default/files/image_tool/images/36/DPRU%20WP02-060.pdf
    File Function: First version, 2002
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    Bibliographic Info

    Paper provided by University of Cape Town, Development Policy Research Unit in its series Working Papers with number 02060.

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    Length: 33 pages
    Date of creation: Jan 2002
    Date of revision:
    Publication status: Published in Working Paper Series by the Development Policy Research Unit, January 2002, pages 1-33
    Handle: RePEc:ctw:wpaper:02060

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    Related research

    Keywords: South Africa: less skilled to skilled labour; trade liberalisation;

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    References

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    1. Ethier, Wilfred, 1974. "Some of the theorems of international trade with many goods and factors," Journal of International Economics, Elsevier, vol. 4(2), pages 199-206, May.
    2. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
    3. Wood, Adrian, 1997. "Openness and Wage Inequality in Developing Countries: The Latin American Challenge to East Asian Conventional Wisdom," World Bank Economic Review, World Bank Group, vol. 11(1), pages 33-57, January.
    4. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
    5. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    6. 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.
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