How Flexible are Wages in Response to Local Unemployment in South Africa?
AbstractIt is commonly claimed that the South African labor market is unusually inflexible owing to the strength of the unions and the system of centralized collective bargaining. One aspect of labor market inflexibility concerns the responsiveness of wages to local unemployment. Examining this spatial relationship, we find that the elasticity of wages to local unemployment rates in South Africa is -0.1, similar to that found in other countries, including the US and the UK. This is striking because South Africa has a national unemployment rate of over 30%. We find that the wage curve elasticity persists over a much wider range of unemployment rates than in OECD countries, implying that unemployment in South Africa can have a large impact on wages.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number GPRG-WPS-015.
Date of creation: 01 Apr 2005
Date of revision:
Wages; Unemployment; Wage Curve; South Africa;
Other versions of this item:
- Geeta Gandhi Kingdon & John Knight, 2006. "How flexible are wages in response to local unemployment in South Africa?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(3), pages 471-495, April.
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
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