Do Unions Matter? Trade Reform and Manufacturing Wages in South Africa-super- †
The effect of nominal tariff cuts on industry wage differentials has been the subject of a number of recent empirical studies. In this paper we investigate the latter relationship with respect to the South African trade reform experience using micro-level labour data for the period from 1995 to 2004. Our study extends on the existing literature in two respects: first, we are the first controlling for the potential effect of labour market institutions, such as collective bargaining power, in assessing the relationship between tariffs and industry wages. Second, we account for general equilibrium effects by controlling for the impact of changes in effective tariff rates. On the one hand, we find that only wages in industries with levels of unionisation beyond a certain threshold were adversely affected by tariff cuts. This negative effect is exacerbated by the extent of sectoral union power. The reported large magnitudes of the tariff impact on wages is in line with the considerably high mark-ups documented for South Africa. On the other hand we find some evidence suggesting that wages in industries with union power below the threshold were positively affected by the tariff cuts. This evidence suggests the omitted variable bias resulting from not controlling for industry heterogeneities in bargaining power when examining the wage--trade relationship. Copyright 2010 The author 2009. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: firstname.lastname@example.org, Oxford University Press.
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.
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.
Volume (Year): 19 (2010)
Issue (Month): 2 (March)
|Contact details of provider:|| Postal: |
Phone: +44-(0)1865 271084
Fax: 01865 267 985
Web page: http://www.jae.oupjournals.org/
More information through EDIRC
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:jafrec:v:19:y:2010:i:2:p:163-204. 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: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.