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Trade Unions v. Statistical Discrimination: Theory and Application to Post-Apartheid South Africa

  • Azam, Jean-Paul
  • Rospabé, Sandrine

A simple model of statistical discrimination is analyzed, which captures some stylized facts of the South African labor market. It shows that this type of discrimination disappears when the wage rates are determined by efficient bargaining between a representative firm and a union, with endogenous membership. This may explain why the wage gap between Black and White workers in post-apartheid South Africa is smaller among unionized workers than among non-unionized ones.

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 348.

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Date of creation: Apr 2005
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Publication status: Published in Journal of Development Economics, vol.�84, n°1, septembre 2007, p.�417-444.
Handle: RePEc:ide:wpaper:4374
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  1. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(2), pages 175-187, January.
  2. T. Paul Schultz & Germano Mwabu, 1998. "Labor Unions and the Distribution of Wages and Employment in South Africa," ILR Review, Cornell University, ILR School, vol. 51(4), pages 680-703, July.
  3. Wintrobe,Ronald, 2000. "The Political Economy of Dictatorship," Cambridge Books, Cambridge University Press, number 9780521794497, 1.
  4. Booth, Alison L & Chatterji, Monojit, 1995. "Union Membership and Wage Bargaining When Membership is Not Compulsory," Economic Journal, Royal Economic Society, vol. 105(429), pages 345-60, March.
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  9. P. G. Moll, 1993. "Black South African Unions: Relative Wage Effects in International Perspective," ILR Review, Cornell University, ILR School, vol. 46(2), pages 245-261, January.
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  11. Sandrine Rospabéa, 2002. "How Did Labour Market Racial Discrimination Evolve After The End Of Apartheid?," South African Journal of Economics, Economic Society of South Africa, vol. 70(1), pages 185-217, 03.
  12. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  13. Timothy Hinks & Duncan Watson, 2001. "A multinomial logit nondiscriminatory approach to estimating racial wage and occupational discrimination," Applied Economics, Taylor & Francis Journals, vol. 33(5), pages 605-612.
  14. Naylor, R. & Cripps, M., 1991. "An Economic Theory of the Open Shop Trade Union," The Warwick Economics Research Paper Series (TWERPS) 372, University of Warwick, Department of Economics.
  15. Myles, Gareth D. & Naylor, Robin A., 1995. "Do unions reduce discrimination? A model of Nash bargaining between a union and an employer with discriminatory tastes," Labour Economics, Elsevier, vol. 2(3), pages 249-274, September.
  16. Frijters, Paul, 1999. "Hiring on the Basis of Expected Productivity in a South African Clothing Firm," Oxford Economic Papers, Oxford University Press, vol. 51(2), pages 345-54, April.
  17. Knight, J B & McGrath, M D, 1977. "An Analysis of Racial Wage Discrimination in South Africa," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 39(4), pages 245-71, November.
  18. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1996. "Wages, Profits, and Rent-Sharing," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 227-251.
  19. Booth, Alison L, 1984. "A Public Choice Model of Trade Union Behaviour and Membership," Economic Journal, Royal Economic Society, vol. 94(376), pages 883-98, December.
  20. Paul Allanson & Jonathan Atkins & Timothy Hinks, 1999. "A Multilateral Decomposition of Racial Wage Differentials in the 1994 South African Labour Market," Dundee Discussion Papers in Economics 099, Economic Studies, University of Dundee.
  21. Alison L. Booth, 1985. "The Free Rider Problem and a Social Custom Model of Trade Union Membership," The Quarterly Journal of Economics, Oxford University Press, vol. 100(1), pages 253-261.
  22. Deolalikar, A.B. & Evenson, R.E., 1988. "Technology Production And Technology Purchase In Indian Industry: An Econometric Analysis," Papers 556, Yale - Economic Growth Center.
  23. Peter G. Moll, 1993. "Black South African unions: Relative wage and inequality effects in international perspective," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(2), pages 245-261, January.
  24. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-47, June.
  25. Phelps, Edmund S, 1972. "The Statistical Theory of Racism and Sexism," American Economic Review, American Economic Association, vol. 62(4), pages 659-61, September.
  26. Robin Naylor, 1989. "Strikes, Free Riders, and Social Customs," The Quarterly Journal of Economics, Oxford University Press, vol. 104(4), pages 771-785.
  27. Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
  28. Booth, Alison L & Chatterji, Monojit, 1993. "Reputation, Membership and Wages in Open Shop Trade Union," Oxford Economic Papers, Oxford University Press, vol. 45(1), pages 23-41, January.
  29. Wintrobe,Ronald, 1998. "The Political Economy of Dictatorship," Cambridge Books, Cambridge University Press, number 9780521583299, 1.
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