Advanced Search
MyIDEAS: Login

Wage inequality, comparative advantage and skill biased technical change in South Africa

Contents:

Author Info

  • Rattsø, Jørn
  • Stokke, Hildegunn

Abstract

International trade may influence income distribution. This study takes as a starting point the puzzling development of relative wages between skilled and unskilled labor in South Africa. Wage inequality decreased during the sanctions period and increased with trade liberalization post Apartheid, contrary to the standard trade theory prediction for an economy with comparative advantage in unskilled labor. We calibrate a Ramsey growth model for South Africa to clarify and quantify the distributive effects of trade barriers, and offer an understanding of the South African experience based on the interaction between openness and skill biased technical change. The dependence on foreign technology increases with openness and gives higher degree of skill bias, which may explain the observed relative wage path. Our model calibration is an alternative to econometric studies separating between trade and technology effects. A counterfactual analysis shows that without sanctions and protectionism during the 1980s the skilled-unskilled wage gap is about 13% larger on average. The quantitative results imply that an increase in trade as share of GDP of 10% points generates an increase in the wage gap of 6.6%. The analysis reveals a tradeoff between growth and distribution. --

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://econstor.eu/bitstream/10419/39942/1/34_stokke.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 with number 34.

as in new window
Length:
Date of creation: 2009
Date of revision:
Handle: RePEc:zbw:gdec09:34

Contact details of provider:
Web page: http://www.ael.ethz.ch/
More information through EDIRC

Related research

Keywords: Wage gap; productivity growth; skill bias; South Africa;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Daron Acemoglu & Simon Johnson & James A. Robinson, 2002. "Reversal Of Fortune: Geography And Institutions In The Making Of The Modern World Income Distribution," The Quarterly Journal of Economics, MIT Press, vol. 117(4), pages 1231-1294, November.
  2. Acemoglu, Daron, 1997. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," CEPR Discussion Papers 1707, C.E.P.R. Discussion Papers.
  3. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  4. Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
  5. Gavin Cameron, 2000. "The Sun Also Rises: Productivity Convergence Between Japan and the USA," Economics Series Working Papers 45, University of Oxford, Department of Economics.
  6. John Romalis, 2007. "Market Access, Openness and Growth," NBER Working Papers 13048, National Bureau of Economic Research, Inc.
  7. Jess Benhabib & Mark Spiegel, 2002. "Human capital and technology diffusion," Proceedings, Federal Reserve Bank of San Francisco, issue Nov.
  8. Verhoogen, Eric A., 2007. "Trade, Quality Upgrading and Wage Inequality in the Mexican Manufacturing Sector," CEPR Discussion Papers 6385, C.E.P.R. Discussion Papers.
  9. Lawrence Edwards & Alberto Behar, 2005. "Trade liberalisation and labour demand within South African manufacturing firms," Working Papers 06, Economic Research Southern Africa.
  10. Paul Beaudry & Mark Doms & Ethan Lewis, 2006. "Endogenous Skill Bias in Technology Adoption: City-Level Evidence from the IT Revolution," NBER Working Papers 12521, National Bureau of Economic Research, Inc.
  11. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Economic Convergence and Economic Policies," NBER Working Papers 5039, National Bureau of Economic Research, Inc.
  12. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Wiley Blackwell, vol. 70(2), pages 199-230, 04.
  13. Philippe Aghion & Peter Howitt, 2006. "Joseph Schumpeter Lecture Appropriate Growth Policy: A Unifying Framework," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 269-314, 04-05.
  14. Rachel Griffith & Stephen Redding & John Van Reenen, 2004. "Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 883-895, November.
  15. Jørn Rattsø & Hildegunn e. Stokke, 2007. "A Growth Model For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 75(4), pages 616-630, December.
  16. Francesco Caselli & Wilbur John Coleman II, 2000. "The World Technology Frontier," NBER Working Papers 7904, National Bureau of Economic Research, Inc.
  17. Liu, Jing & Channing Arndt & Thomas Hertel, 2003. "Parameter Estimation and Measures of Fit in A Global, General Equilibrium Model," GTAP Working Papers 1200, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  18. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  19. Lawrence Edwards & Robert Z. Lawrence, 2006. "South African Trade Policy Matters: Trade Performance and Trade Policy," NBER Working Papers 12760, National Bureau of Economic Research, Inc.
  20. Alcala, Francisco & Ciccone, Antonio, 2001. "Trade and Productivity," CEPR Discussion Papers 3095, C.E.P.R. Discussion Papers.
  21. Howitt, Peter & Aghion, Philippe, 2006. "Appropriate Growth Policy: A Unifying Framework," Scholarly Articles 4554121, Harvard University Department of Economics.
  22. Daron Acemoglu & Jaume Ventura, 2002. "The World Income Distribution," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 659-694, May.
  23. Cameron, Gavin & Proudman, James & Redding, Stephen, 2005. "Technological convergence, R&D, trade and productivity growth," European Economic Review, Elsevier, vol. 49(3), pages 775-807, April.
  24. Robert E. Lucas, 2009. "Trade and the Diffusion of the Industrial Revolution," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 1-25, January.
  25. Abdelhak S. Senhadji & Claudio E. Montenegro, 1999. "Time Series Analysis of Export Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 46(3), pages 2.
  26. Jørn Rattsø & Hildegunn E. Stokke, 2009. "Trade barriers to growth in South Africa: Endogenous investment-productivity-trade interaction," DEGIT Conference Papers c014_010, DEGIT, Dynamics, Economic Growth, and International Trade.
  27. L Edwards, 2001. "Globalisation And The Skills Bias Of Occupational Employment In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 69(1), pages 40-71, 03.
  28. Janine Aron & John Muellbauer, 2002. "Interest Rate Effects on Output: Evidence from a GDP Forecasting Model for South Africa," Economics Series Working Papers WPS/2002-04, University of Oxford, Department of Economics.
  29. Murray Leibbrandt & Laura Poswell & Pranushka & Matthew Welch & Ingrid Woolard, 2004. "Measuring recent changes in South African inequality and poverty using 1996 and 2001 census data," SALDRU/CSSR Working Papers 084, Southern Africa Labour and Development Research Unit, University of Cape Town.
  30. Zhu, Susan Chun & Trefler, Daniel, 2005. "Trade and inequality in developing countries: a general equilibrium analysis," Journal of International Economics, Elsevier, vol. 65(1), pages 21-48, January.
  31. Peter J. Klenow & Andres Rodriguez-Clare, 2004. "Externalities and Growth," NBER Working Papers 11009, National Bureau of Economic Research, Inc.
  32. Johannes Fedderke & Yongcheol Shin, 2004. "Trade, Technology and Wage Inequality in the South African Manufacturing Sectors," ESE Discussion Papers 106, Edinburgh School of Economics, University of Edinburgh.
  33. Hildegunn Stokke, 2004. "Technology adoption and multiple growth paths: An intertemporal general equilibrium analysis of the catch-up process in Thailand," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 140(1), pages 80-109, March.
  34. Johannes Fedderke, 2005. "Technology, Human Capital and Growth," Working Papers 27, Economic Research Southern Africa.
  35. Parente, Stephen L & Prescott, Edward C, 1994. "Barriers to Technology Adoption and Development," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 298-321, April.
  36. Lawrence Edwards, 2004. "A firm level analysis of trade, technology and employment in South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(1), pages 45-61.
  37. Vandenbussche, Jérôme & Aghion, Philippe & Meghir, Costas, 2006. "Growth, distance to frontier and composition of human capital," Scholarly Articles 12490648, Harvard University Department of Economics.
  38. Esquivel, Gerardo & Rodriguez-Lopez, Jose Antonio, 2003. "Technology, trade, and wage inequality in Mexico before and after NAFTA," Journal of Development Economics, Elsevier, vol. 72(2), pages 543-565, December.
  39. Ardington, Cally & Lam, David & Leibbrandt, Murray & Welch, Matthew, 2006. "The sensitivity to key data imputations of recent estimates of income poverty and inequality in South Africa," Economic Modelling, Elsevier, vol. 23(5), pages 822-835, September.
  40. Par Hansson & Magnus Henrekson, 1994. "What makes a country socially capable of catching up?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(4), pages 760-783, December.
  41. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:zbw:gdec09:34. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.