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Youth unemployment, firm size and reservation wages in South Africa

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  • Rankin, Neil A.
  • Roberts, Gareth A.

Abstract

Youth unemployment in South Africa is high. We investigate whether one of the reasons may be that the wages young people want or need are above those that they could reasonably expect to earn given their characteristics. Unlike previous work on the relationship between reservation wages and unemployment we differentiate between wages in different sizes of firms. Larger firms pay more and thus, even if reservation wages are similar to average predicted wages they may be above wages that young people could expect to earn in smaller firms. We find that this is the case.

Suggested Citation

  • Rankin, Neil A. & Roberts, Gareth A., 2010. "Youth unemployment, firm size and reservation wages in South Africa," MPRA Paper 24027, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:24027
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Steven B. Caudill & Charles O. Kroncke & Franklin G. Mixon, 2021. "Is there a firm size‐wage gap after economic transition? – An examination of for‐profit and not‐for‐profit firms in Estonia," LABOUR, CEIS, vol. 35(4), pages 435-449, December.
    2. Nicoli Nattrass & Jeremy Seekings, 2018. "Employment and labour productivity in high unemployment countries," Development Policy Review, Overseas Development Institute, vol. 36(S2), pages 769-785, September.
    3. Björn Nilsson, 2019. "The School-to-Work Transition in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 55(5), pages 745-764, May.
    4. Vincent Dadam & Nicola Viegi, 2021. "Estimating a New Keynesian Wage Phillips Curve," Working Papers 202107, University of Pretoria, Department of Economics.
    5. Bhorat, Haroon & Hirsch, Alan & Kanbur, Ravi & Ncube, Mthuli, 2014. "Economic Policy in South Africa: Past, Present, and Future," Working Papers 180150, Cornell University, Department of Applied Economics and Management.
    6. Kim Engle & Cecil Mlatsheni, 2017. "The extent of churn in the South African youth labour market: Evidence from NIDS 2008-2015," SALDRU Working Papers 201, Southern Africa Labour and Development Research Unit, University of Cape Town.
    7. Nicola Viegi & Vincent Dadam, 2020. "Estimating a New Keynesian Wage Phillips Curve," Working Papers 11000, South African Reserve Bank.
    8. Haroon Bhorat & Tara Caetano & Benjamin Jourdan & Ravi Kanbur & Christopher Rooney & Benjamin Stanwix & Ingrid Woolard, 2016. "Investigating the Feasibility of a National Minimum Wage for South Africa," Working Papers 201601, University of Cape Town, Development Policy Research Unit.
    9. Derek Yu, 2012. "Youths in the South African labour market since the transition: A study of changes between 1995 and 2011," Working Papers 18/2012, Stellenbosch University, Department of Economics.
    10. Derek Yu, 2013. "Youth unemployment in South Africa since 2000 revisited," Working Papers 04/2013, Stellenbosch University, Department of Economics.
    11. Laurel Wheeler & Robert Garlick & Eric Johnson & Patrick Shaw & Marissa Gargano, 2022. "LinkedIn(to) Job Opportunities: Experimental Evidence from Job Readiness Training," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 101-125, April.
    12. Precious Mncayi & Phindile Mdluli, 2019. "Why are they not looking for employment? A South African Youth Perspective," Proceedings of International Academic Conferences 9912247, International Institute of Social and Economic Sciences.
    13. Ferdi Botha, 2012. "The Economics Of Suicide In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 80(4), pages 526-552, December.

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    More about this item

    Keywords

    Youth unemployment; firm size; reservation wages; South Africa;
    All these keywords.

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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