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The Cost of Rigidity: The Case of the South African Labor Market

  • Johannes Fedderke

The South African labor market has been characterized by high and persistent levels of unemployment, and a poor capacity to create jobs. This paper examines existing evidence on what rigidities have generated this outcome. Pricing power in output markets, as well as labor supply and demand side rigidities are all found to have contributed, resulting in excessive increases in real wage costs which under conditions of relatively low economic growth, has produced a stagnant labor market. Policy requirements are the pursuit of stonger economic growth and reductions in real labor costs.

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Paper provided by Economic Research Southern Africa in its series Working Papers with number 290.

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Length: 27 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:rza:wpaper:290
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  14. Paul Cichello & Gary Fields & Murray Leibbrandt, 2003. "Earnings and Employment Dynamics for Africans in Post-apartheid South Africa: A Panel Study of KwaZulu-Natal," Working Papers 03077, University of Cape Town, Development Policy Research Unit.
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  22. Philippe Aghion & Johannes Fedderke & Peter Howitt & Chandana Kularatne & Nicola Viegi, 2008. "Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries," Documents de Travail de l'OFCE 2008-23, Observatoire Francais des Conjonctures Economiques (OFCE).
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  25. Taryn Dinkelman, 2004. "How Household Context Affects Search Outcomes Of The Unemployed In Kwazulu-Natal, South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 72(3), pages 484-521, 09.
  26. Geeta Gandhi Kingdon & John Knight, 2004. "Race and the Incidence of Unemployment in South Africa," Review of Development Economics, Wiley Blackwell, vol. 8(2), pages 198-222, 05.
  27. Johannes Fedderke & Chandana Kularatne & Martine Mariotti, 2007. "Mark-up Pricing in South African Industry," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(1), pages 28-69, January.
  28. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
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