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Industry Structure and Labour Market Flexibility in the South African Manufacturing Sector: A Time Series and Panel Data Approach

Author

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  • Johannes W. Fedderke
  • Andrew J Hill

Abstract

Our investigation of industry structure in South African manufacturing reveals evidence of imperfect competition. We find an average mark-up of 50% for the period 1970 to 2004. Results suggest that there is no consistent trend in the mark-up over time. This paper extends the analysis of industry structure by linking it to labour market flexibility. We infer the proportion of labour cost that is fixed rather than flexible from the mark-up, and find that two thirds of total labour employed in South African manufacturing is devoted to fixed costs. We find that this proportion falls during the 1980s and rises during the 1990s, suggesting an increase in labour flexibility followed by a decrease.

Suggested Citation

  • Johannes W. Fedderke & Andrew J Hill, 2006. "Industry Structure and Labour Market Flexibility in the South African Manufacturing Sector: A Time Series and Panel Data Approach," Working Papers 43, Economic Research Southern Africa.
  • Handle: RePEc:rza:wpaper:43
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    References listed on IDEAS

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    Cited by:

    1. Rankin Neil & Burger Rulof & Kreuser Friedrich, 2015. "The elasticity of substitution and labour-displacing technical change in post-apartheid South Africa," WIDER Working Paper Series 101, World Institute for Development Economic Research (UNU-WIDER).
    2. Gupta, Rangan & Steinbach, Rudi, 2013. "A DSGE-VAR model for forecasting key South African macroeconomic variables," Economic Modelling, Elsevier, vol. 33(C), pages 19-33.
    3. Johannes Fedderke, 2012. "The Cost of Rigidity: The Case of the South African Labor Market," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 54(4), pages 809-842, December.
    4. repec:bla:sajeco:v:85:y:2017:i:2:p:161-177 is not listed on IDEAS

    More about this item

    Keywords

    Mark-up; industry structure; labour market flexibility;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J29 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Other
    • J69 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Other
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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