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A Multilateral Decomposition of Racial Wage Differentials in the 1994 South African Labour Market

  • Paul Allanson
  • Jonathan Atkins
  • Timothy Hinks

This article develops a new multilateral decomposition procedure for the analysis of wage differentials and applies this to the racial wage hierarchy in the South African labour market. Using micro-data on male workers from the 1994 October Household survey, it is found that whites received the highest wages followed by Asians, then coloureds and finally blacks. Productivity differences are shown to explain approximately two-thirds of the white and black wage differentials, with the unexplained residuals attributable to discriminatory overpayment of whites and underpayment of blacks, and virtually all of the Asian and coloured differentials. The results provide the basis for a discussion of post-apartheid policy initiatives to tackle racial inequalities in the labour market.

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File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_099.pdf
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Paper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 099.

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Date of creation: Sep 1999
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Handle: RePEc:dun:dpaper:099
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  1. L. Human & M. J. Greenacre*, 1987. "Labour Market Discrimination in the Manufacturing Sector: The Impact of Race, Gender, Education and Age on Income," South African Journal of Economics, Economic Society of South Africa, vol. 55(2), pages 98-106, 06.
  2. Polachek,Solomon W. & Siebert,W. Stanley, 1993. "The Economics of Earnings," Cambridge Books, Cambridge University Press, number 9780521367288.
  3. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
  4. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
  5. Banerjee, Biswajit & Knight, J. B., 1985. "Caste discrimination in the Indian urban labour market," Journal of Development Economics, Elsevier, vol. 17(3), pages 277-307, April.
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