Labour Market Racial Discrimination in South Africa Revisited
AbstractDiscrimination is a significant issue in labour market economics across developed as well as developing countries. In this paper, we inquire the actual size of wage discrimination in the Republic of South Africa, accounting for large differences in individual endowments. We apply the Oaxaca-Blinder decomposition as well as propensity score matching to adequately determine the role of discrimination in the wage gaps observed. Although the size of the absolute racial wage gap is enormous, amounting for more than 500%, the actual estimated effect non-attributable to other factors ranges between 45%-55%. This estimator, however, assumes homogenous discrimination across the wage distribution, while data suggest that there are significant educational, sectoral and occupational differentials. To account for these effects, we implement propensity score matching by finding “statistical twins” of the White population among the Black population, thus we demonstrate how wages differ between these groups in comparable labour market situations. Here too we find that wages for the White are on average approximately 30% higher, while the effects vary at quartiles of the wage distribution.
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Bibliographic InfoPaper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2009-08.
Length: 20 pages
Date of creation: 2009
Date of revision:
discrimination; Oaxaca-Blinder decomposition; propensity score matching; Republic of South Africa; racial wage gap;
Other versions of this item:
- Maciej, Szelewicki & Tyrowicz, Joanna, 2009. "Labour Market Racial Discrimination in South Africa Revisited," MPRA Paper 16440, University Library of Munich, Germany.
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
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Working Paper Series
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02/2003, Stellenbosch University, Department of Economics.
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