Unemployment and wages in South Africa: a spatial approach
A large amount of recent evidence finds a negative relationship between local unemployment and wages in OECD countries, a relationship christened a ‘wage curve’. This contradicts the conventional model of the labour market in which high unemployment regions have higher wages to compensate for search and other costs. This paper discovers a wage curve in South Africa, a country with several times the typical unemployment rate of OECD countries. The wage curve elasticity in South Africa is similar to that in OECD countries (-0.1) but persists over a much larger range of unemployment rates, implying that unemployment can have a large impact on wages in South Africa. However, this wage flexibility does not extend to union wages which are well insulated from local unemployment conditions. The results here also shed light on the segmentation of the labour market based on labour immobility and on the debate about the appropriate definition of unemployment in South Africa.
|Date of creation:||01 Apr 1999|
|Date of revision:|
|Contact details of provider:|| Postal: Manor Rd. Building, Oxford, OX1 3UQ|
Web page: http://www.economics.ox.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Card, 1995. "The Wage Curve: A Review," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 285-299, June.
- David G. Blanchflower, 1997.
"Changes Over Time in Union Relative Wage Effects in Great Britain and the United States,"
NBER Working Papers
6100, National Bureau of Economic Research, Inc.
- Blanchflower, D-G, 1997. "Changes Over Time in Union Relative Wage Effects in Great Britain and the United States," Papers 15, Centre for Economic Performance & Institute of Economics.
- Carruth, Alan & Oswald, Andrew, 1987. "Wage Inflexibility in Britain," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(1), pages 59-78, February.
- Blanchflower, David G & Oswald, Andrew J, 1993. " Testing for a U-Shaped Wage Curve. A Response," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(2), pages 245-48.
- Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:wps/1999-12. 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: (Monica Birds)
If references are entirely missing, you can add them using this form.