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Industry Structure and Labour Market Flexibility in the South African Manufacturing Sector: A Time Series and Panel Data Approach

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Author Info

  • Johannes W. Fedderke
  • Andrew J Hill

Abstract

Our investigation of industry structure in South African manufacturing reveals evidence of imperfect competition. We find an average mark-up of 50% for the period 1970 to 2004. Results suggest that there is no consistent trend in the mark-up over time. This paper extends the analysis of industry structure by linking it to labour market flexibility. We infer the proportion of labour cost that is fixed rather than flexible from the mark-up, and find that two thirds of total labour employed in South African manufacturing is devoted to fixed costs. We find that this proportion falls during the 1980s and rises during the 1990s, suggesting an increase in labour flexibility followed by a decrease.

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Bibliographic Info

Paper provided by Economic Research Southern Africa in its series Working Papers with number 43.

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Length: 28 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:rza:wpaper:43

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Keywords: Mark-up; industry structure; labour market flexibility;

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Cited by:
  1. Gupta, Rangan & Steinbach, Rudi, 2013. "A DSGE-VAR model for forecasting key South African macroeconomic variables," Economic Modelling, Elsevier, vol. 33(C), pages 19-33.
  2. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan, vol. 54(4), pages 809-842, December.

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