IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Industry structure and labor market flexibility in the South African manufacturing sector: A time series and panel data approach

  • Fedderke, Johannes W.
  • Hill, Andrew J.

This paper presents a joint analysis of labor market flexibility and product market structure. Our investigation confirms earlier results of imperfect competition in South African manufacturing where we find an average mark-up of 50% for the period 1970 to 2004 that is without consistent trend over time. The contribution of the paper is to provide a theoretically grounded means of linking output market conduct to labor market flexibility. We infer the proportion of labor associated with rigidities in the labor market from the mark-up, and find that two thirds of total labor employed in South African manufacturing is associated with rigidities. We find that this proportion falls during the 1980s and rises during the 1990s, suggesting an increase in labor flexibility followed by a decrease.

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:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 3 (May)
Pages: 1291-1302

in new window

Handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1291-1302
Contact details of provider: Web page:

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. Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9215, Faculty of Economics, University of Cambridge.
  2. Roeger, Werner, 1995. "Can Imperfect Competition Explain the Difference between Primal and Dual Productivity Measures? Estimates for U.S. Manufacturing," Journal of Political Economy, University of Chicago Press, vol. 103(2), pages 316-30, April.
  3. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  4. 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.
  5. B. T. McCallum, 1970. "The Effect of Demand on Prices in British Manufacturing: Another View," Review of Economic Studies, Oxford University Press, vol. 37(1), pages 147-156.
  6. Basu, Susanto, 1995. "Intermediate Goods and Business Cycles: Implications for Productivity and Welfare," American Economic Review, American Economic Association, vol. 85(3), pages 512-31, June.
  7. Abhijit Banerjee & Sebastian Galiani & Jim Levinsohn & Zoë McLaren & Ingrid Woolard, 2007. "Why Has Unemployment Risen in the New South Africa," NBER Working Papers 13167, National Bureau of Economic Research, Inc.
  8. Johannes Fedderke & Chandana Kularatne & Martine Mariotti, 2005. "Mark-up Pricing in South African Industry," Working Papers 01, Economic Research Southern Africa.
  9. Olivier Blanchard & Francesco Giavazzi, 2003. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labor Markets," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 879-907.
  10. repec:crs:wpaper:9645 is not listed on IDEAS
  11. Johannes Fedderke, 2004. "Investment in Fixed Capital Stock: Testing for the Impact of Sectoral and Systemic Uncertainty," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(2), pages 165-187, 05.
  12. S. Dobbelaere, 2003. "Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/171, Ghent University, Faculty of Economics and Business Administration.
  13. Damien J. Neven & Lars-Hendrik Röller & Zhentang Zhang, 2002. "Endogenous Costs and Price-Cost Margins," Discussion Papers of DIW Berlin 294, DIW Berlin, German Institute for Economic Research.
  14. Lawrence Edwards, 2005. "Has South Africa Liberalised Its Trade?," South African Journal of Economics, Economic Society of South Africa, vol. 73(4), pages 754-775, December.
  15. Martin Wittenberg, 2002. "Job Search In South Africa: A Nonparametric Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 70(8), pages 1163-1196, December.
  16. Pesaran, M. H. & Shin, Y. & Smith, R. J., 1996. "Testing for the 'Existence of a Long-run Relationship'," Cambridge Working Papers in Economics 9622, Faculty of Economics, University of Cambridge.
  17. Bughin, Jacques, 1996. "Trade Unions and Firms' Product Market Power," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 289-307, September.
  18. Aghion, Philippe & Braun, Matias & Fedderke, Johannes, 2008. "Competition and Productivity Growth in South Africa," Scholarly Articles 3350068, Harvard University Department of Economics.
  19. Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy: the Case of the South African Manufacturing Industries," Working Papers 93, Economic Research Southern Africa.
  20. Swamy, P A V B, 1970. "Efficient Inference in a Random Coefficient Regression Model," Econometrica, Econometric Society, vol. 38(2), pages 311-23, March.
  21. Schroeter, John R, 1988. "Estimating the Degree of Market Power in the Beef Packing Industry," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 158-62, February.
  22. Joaquim Oliveira Martins & Stefano Scarpetta, 1999. "The Levels and Cyclical Behaviour of Mark-ups Across Countries and Market Structures," OECD Economics Department Working Papers 213, OECD Publishing.
  23. J.W. Fedderke & E. Schaling, 2005. "Modelling Inflation In South Africa: A Multivariate Cointegration Analysis," South African Journal of Economics, Economic Society of South Africa, vol. 73(1), pages 79-92, 03.
  24. Steven Dunaway & Lamin Leigh & Xiangming Li, 2009. "How Robust Are Estimates Of Equilibrium Real Exchange Rates: The Case Of China," Pacific Economic Review, Wiley Blackwell, vol. 14(3), pages 361-375, 08.
  25. Rulof Burger & Ingrid Woolard, 2005. "The State of the Labour Market in South Africa after the First Decade of Democracy," SALDRU/CSSR Working Papers 133, Southern Africa Labour and Development Research Unit, University of Cape Town.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:eee:ecmode:v:28:y:2011:i:3:p:1291-1302. 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: (Zhang, Lei)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.