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Returns to Race: Labour Market Discrimination in Post-Apartheid South Africa

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  • Rulof Burger

    ()
    (Department of Economics, Stellenbosch University)

  • Rachel Jafta

    ()
    (Department of Economics, Stellenbosch University)

Abstract

This paper empirically assesses the impact of post-1994 policy making on racial discrimination in the South African labour market. The post-apartheid government has implemented a series of remedial measures, including an ambitious set of black empowerment and affirmative action policies. The first part of the paper gives an overview of the South African labour market post-1994 and the most important legislation, regulations and other measures aimed at redressing the inequalities of the past. We then argue that some assessment of whether the aims of these measures are being achieved is necessary. The empirical part of the paper employs the decomposition techniques of Oaxaca (1973) and Blinder (1973), Brown, Moon and Zoloth (1980) and Juhn, Murphy and Pierce (1991, 1993) to analyse three stages of the employment process: employment, occupational attainment and wage determination. Fifteen nationally representative household surveys are used to compare the evolution of discriminatory hiring and remuneration practices between 1995 and 2004 and across population groups. The results suggest that affirmative action policies have had no observable effect on the racial employment gap, and its impact on the wage distribution is limited to a small narrowing of wages at the top of the wage distribution. There appears to have been a shift away from “pure discrimination” and towards differential returns to education, which is consistent with an increasingly important role for the quality of education in labour market outcomes.

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File URL: http://www.ekon.sun.ac.za/wpapers/2006/wp042006/wp-04-2006.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 04/2006.

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Date of creation: 2006
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Handle: RePEc:sza:wpaper:wpapers18

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Keywords: growth; Discrimination; South Africa;

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References

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  1. Murray Leibbrandt & Haroon Bhorat, 1999. "Modelling Vulnerability and Low Earnings in the South African Labour Market," Working Papers, University of Cape Town, Development Policy Research Unit 99032, University of Cape Town, Development Policy Research Unit.
  2. Geeta Kingdon & John Knight, 2000. "Are Searching and Non-searching Unemployment Distinct States when Unemployment is High? The Case of South Africa," Economics Series Working Papers WPS/2000-02, University of Oxford, Department of Economics.
  3. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  4. Randall S. Brown & Marilyn Moon & Barbara S. Zoloth, 1980. "Incorporating Occupational Attainment in Studies of Male-Female Earnings Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 15(1), pages 3-28.
  5. Servaas van der Berg, 2006. "How effective are poor schools? Poverty and educational outcomes in South Africa," Working Papers 06/2006, Stellenbosch University, Department of Economics.
  6. O'Regan, Katherine M. & Quigley, John M., 1995. "Teenage Employment and the Spatial Isolation of Minority and Poverty Households," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt0fm053h0, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  7. David Neumark, 1987. "Employers' discriminatory behavior and the estimation of wage discrimination," Special Studies Papers, Board of Governors of the Federal Reserve System (U.S.) 227, Board of Governors of the Federal Reserve System (U.S.).
  8. Richard Startz & Lundberg, . "Private Discrimination and Social Intervention in Competitive Labor Markets," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 19-81, Wharton School Rodney L. White Center for Financial Research.
  9. Kahn, Lawrence M, 1991. "Customer Discrimination and Affirmative Action," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 29(3), pages 555-71, July.
  10. D'Amico, Thomas F, 1987. "The Conceit of Labor Market Discrimination," American Economic Review, American Economic Association, American Economic Association, vol. 77(2), pages 310-15, May.
  11. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  12. Coate, S. & Loury, G.C., 1992. "Will Affirmative Action Policies Eliminate Negative Stereotypes?," Papers, Boston University - Department of Economics 3, Boston University - Department of Economics.
  13. Sandrine Rospabéa, 2002. "How Did Labour Market Racial Discrimination Evolve After The End Of Apartheid?," South African Journal of Economics, Economic Society of South Africa, Economic Society of South Africa, vol. 70(1), pages 185-217, 03.
  14. William A. Darity & Patrick L. Mason, 1998. "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 12(2), pages 63-90, Spring.
  15. 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, University of Chicago Press, vol. 101(3), pages 410-42, June.
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Cited by:
  1. Hélène Maisonnave & Bernard Decaluwé & Margaret Chitiga, 2009. "Does South African Affirmative Action Policy Reduce Poverty? a CGE Analysis," Cahiers de recherche, CIRPEE 0936, CIRPEE.
  2. O'Gorman, Melanie, 2010. "Racial earnings inequality in South Africa: An assessment of policy options," Journal of Policy Modeling, Elsevier, Elsevier, vol. 32(6), pages 703-718, November.
  3. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers, Southern Africa Labour and Development Research Unit, University of Cape Town 75, Southern Africa Labour and Development Research Unit, University of Cape Town.
  4. Maciej Szelewicki & Joanna Tyrowicz, 2009. "Labour Market Racial Discrimination in South Africa Revisited," Working Papers, Faculty of Economic Sciences, University of Warsaw 2009-08, Faculty of Economic Sciences, University of Warsaw.
  5. Haroon Bhorat & Sumayya Goga, 2012. "The Gender Wage Gap in the Post-apartheid South African Labour Market," Working Papers, University of Cape Town, Development Policy Research Unit 12148, University of Cape Town, Development Policy Research Unit.
  6. Derek Yu, 2012. "Youths in the South African labour market since the transition: A study of changes between 1995 and 2011," Working Papers 18/2012, Stellenbosch University, Department of Economics.
  7. Debra Shepherd, 2008. "Post-Apartheid Trends in Gender Discrimination in South Africa: Analysis through Decomposition Techniques," Working Papers 06/2008, Stellenbosch University, Department of Economics.

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