IDEAS home Printed from https://ideas.repec.org/p/ctw/wpaper/03078.html

The Impact of Privatisation and Regulatory Reform on Wage Premia in State-Owned Enterprises in South Africa

Author

Listed:
  • Damian Hattingh
  • James Hodge
  • Sandrine Rospabé

    (Development Policy Research Unit, University of Cape Town)

Abstract

Whilst much has been said about the employment effects of the privatisation of state-owned enterprises in South Africa, the debate has largely overlooked the impact of these events on the wage levels of those workers that retain their jobs in the restructuring process. This paper estimates earnings functions for workers in the South African economy to determine the impact of these changes. The results suggest that those workers that do retain their jobs in the restructuring process will be better off initially. This is because the state-owned firm will shift to become a partially private firm that operates in a highly regulated industry structure with limited competition. This enables the firm to earn abnormal profits and unionised labour is able to share in some of these profits. However, uncertainty at the individual level over whether they will be one of the lucky workers to retain their post will ensure that most workers will oppose any restructuring. The paper also demonstrates that any further liberalisation of the previously state-owned sector to introduce greater competition will make those workers worse off as their premium is eroded along with the abnormal profits. This applies as much to union members and non-union members. The result is that workers can be expected to oppose any further restructuring of these former state-owned firms after they have been initially reformed.

Suggested Citation

  • Damian Hattingh & James Hodge & Sandrine Rospabé, 2003. "The Impact of Privatisation and Regulatory Reform on Wage Premia in State-Owned Enterprises in South Africa," Working Papers 03078, University of Cape Town, Development Policy Research Unit.
    • Handle: RePEc:ctw:wpaper:03078
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/11427/7387
    File Function: First version, 2003
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Francis Teal, 1994. "The size and scources of economic rents in a developing country manufacturing labour market," Economics Series Working Papers WPS/1995-06, University of Oxford, Department of Economics.
    2. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    3. Kristin F. Butcher & Cecilia Elena Rouse, 2001. "Wage Effects of Unions and Industrial Councils in South Africa," ILR Review, Cornell University, ILR School, vol. 54(2), pages 349-374, January.
    4. Haroon Bhorat, 2000. "Wage premia and wage differentials in the South African labour market," Working Papers 00043, University of Cape Town, Development Policy Research Unit.
    5. James M. Poterba & Kim S. Rueben, 1998. "Fiscal Institutions and Public Sector Labor Markets," NBER Working Papers 6659, National Bureau of Economic Research, Inc.
    6. Rose, Nancy L, 1987. "Labor Rent Sharing and Regulation: Evidence from the Trucking Industry," Journal of Political Economy, University of Chicago Press, vol. 95(6), pages 1146-1178, December.
    7. Dorothe Bonjour, 2000. "Are civil servants paid too much? - A distributional analysis of the public-private wage gap in Switzerland," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(4), pages 557-578, December.
    8. Paul Collier & Jan Willem Gunning, 1999. "Why Has Africa Grown Slowly?," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 3-22, Summer.
    9. Sandrine Rospabé, 2001. "Making Racial Wage Relations Fair in South Africa: A Focus on the Role of Trade Unions," Working Papers 01048, University of Cape Town, Development Policy Research Unit.
    10. Richard A. Posner, 1971. "Taxation by Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 22-50, Spring.
    11. Godfrey R.A. Dunkley, 2000. "Republic of South Africa," American Journal of Economics and Sociology, Wiley Blackwell, vol. 59(5), pages 299-311, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Timothy Hinks, 2008. "Poverty, networks and location: the determinants of job-search in South Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(2), pages 117-131.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kris James Mitchener & Matthew Jaremski, 2014. "The Evolution of Bank Supervision: Evidence from U.S. States," NBER Working Papers 20603, National Bureau of Economic Research, Inc.
    2. Harold Mulherin, J., 2007. "Measuring the costs and benefits of regulation: Conceptual issues in securities markets," Journal of Corporate Finance, Elsevier, vol. 13(2-3), pages 421-437, June.
    3. James W. Hughes & Michael J. Moore & Edward A. Snyder, 2002. ""Napsterizing" Pharmaceuticals: Access, Innovation, and Consumer Welfare," NBER Working Papers 9229, National Bureau of Economic Research, Inc.
    4. Bennett, M., 2003. "Organizing in the informal economy : a case study of the clothing industry in South Africa," ILO Working Papers 993581553402676, International Labour Organization.
    5. Natalia Vershinina & Gideon Markman & Liang Han & Peter Rodgers & John Kitching & Nigar Hashimzade & Rowena Barrett, 2022. "Gendered regulations and SME performance in transition economies," Small Business Economics, Springer, vol. 58(2), pages 1113-1130, February.
    6. Zhimin Liao & Xiaofang Chen, 2011. "Why the Entry Regulation of Mobile Phone Manufacturing in China Collapsed: The Impact of Technological Innovation," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 207-228.
    7. Theodore Keeler, 1984. "Theories of regulation and the deregulation movement," Public Choice, Springer, vol. 44(1), pages 103-145, January.
    8. David Sappington & Dennis Weisman, 2012. "Regulating regulators in transitionally competitive markets," Journal of Regulatory Economics, Springer, vol. 41(1), pages 19-40, February.
    9. Hazlett, Thomas W, 1998. "Assigning Property Rights to Radio Spectrum Users: Why Did FCC License Auctions Take 67 Years?," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 529-575, October.
    10. Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
    11. Mina Baliamoune-Lutz & Stefan Lutz, 2010. "Pre-emption, Predation, and Minimum Quality Standards," International Economic Journal, Taylor & Francis Journals, vol. 24(1), pages 111-123.
    12. Mathew McCubbins & Thomas Schwartz, 1985. "The politics of flatland," Public Choice, Springer, vol. 46(1), pages 45-60, January.
    13. Birke, Franziska, 2007. "Universaldienstregulierung in der Telekommunikation heute: Herausforderungen, Chancen und Risiken ; ein historischer Ansatz," Discussion Papers 114, University of Freiburg, Institute for Transport Economics and Regional Policy.
    14. repec:ces:ifodic:v:8:y:2010:i:3:p:14566927 is not listed on IDEAS
    15. Kotsios, Panayotis, 2010. "Regulatory Barriers to Entry in Industrial Sectors," MPRA Paper 27976, University Library of Munich, Germany.
    16. George Daly & Thomas Mayor, 1986. "Equity, efficiency and environmental quality," Public Choice, Springer, vol. 51(2), pages 141-159, January.
    17. Sam Peltzman, 2022. "“The theory of economic regulation” after 50 years," Public Choice, Springer, vol. 193(1), pages 7-21, October.
    18. William L. Ferguson & Joseph E. Johnson, 1998. "Issues In Multi‐State Producer Regulation," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 2(1), pages 50-63, July.
    19. Philipp Lergetporer & Jens Ruhose & Lisa Simon, 2018. "Entry Barriers and the Labor Market Outcomes of Incumbent Workers: Evidence from a Deregulation Reform in the German Crafts Sector," CESifo Working Paper Series 7274, CESifo.
    20. Dennis W. Carlton & Randal C. Picker, 2014. "Antitrust and Regulation," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 25-61, National Bureau of Economic Research, Inc.
    21. Wieland, Bernhard, 2006. "Special interest groups and 4th best transport pricing," Discussion Papers 1/2006, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.

    More about this item

    Keywords

    ;
    ;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctw:wpaper:03078. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Waseema Petersen The email address of this maintainer does not seem to be valid anymore. Please ask Waseema Petersen to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/dpuctza.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.