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Will Lower Wages Cause Faster Growth in South Africa?

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  • B Gibson

Abstract

Higher wages for unskilled workers will probably improve the distribution of income, but the impact of wage movements on employment depends crucially on the macroeconomic context. Whereas a restrictive fiscal and monetary stance impedes job creation, a more expansionary set of macroeconomic policies will have a positive effect on employment, albeit at the cost of inflation If wage bargains spill over into the public sector, then, assuming a PSBR constraint is in force, public investment will adjust and the economy will become less stable. Despite the (slight) profit-led character of the South African economy, it is mainly policy that stands in the way of a more equalised distribution of income, not market forces, the private sector, international investors or any other special feature of the South African economy.

Suggested Citation

  • B Gibson, 2000. "Will Lower Wages Cause Faster Growth in South Africa?," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 24(3), pages 143-163, November.
    • Handle: RePEc:taf:rseexx:v:24:y:2000:i:3:p:143-163
    DOI: 10.1080/03796205.2000.12129281
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    Cited by:

    1. Kalie Pauw & Lawrence Edwards, 2006. "Evaluating The General Equilibrium Effects Of A Wage Subsidy Scheme For South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 74(3), pages 442-462, September.

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