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Modelling cognitive skills, ability and school quality to explain labour market earnings differentials

Author

Listed:
  • Cobus Burger

    () (Department of Economics, University of Stellenbosch)

  • Servaas van der Berg

    () (Department of Economics, University of Stellenbosch)

Abstract

Attempts to explain wage differences between race groups in South Africa are constrained by the fact that quality of education is known to differ greatly between groups, thus the unexplained portion of the wage gap may be much affected by such differences in education quality. Using a simulation model that utilises school-leaving (matric) examination results and educational attainment levels to generate estimates of education quality, we find that much of the wage gap can indeed be explained by differences in education quality. Thus the unexplained residual, often identified with labour market discrimination, usually greatly over-estimates such discrimination. This emphasises even more strongly the need for greater equity in educational outcomes, particularly in the often unobserved quality of education.

Suggested Citation

  • Cobus Burger & Servaas van der Berg, 2011. "Modelling cognitive skills, ability and school quality to explain labour market earnings differentials," Working Papers 08/2011, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers136
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2011/wp082011/wp-08-2011.pdf
    File Function: First version, 2011
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    References listed on IDEAS

    as
    1. Servaas van der Berg & Louise Wood & Neil le Roux, 2002. "Differentiation in black education," Development Southern Africa, Taylor & Francis Journals, vol. 19(2), pages 289-306.
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    Cited by:

    1. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers 75, Southern Africa Labour and Development Research Unit, University of Cape Town.

    More about this item

    Keywords

    South Africa; education quality; wages; labour market; Oaxaca-Blinder decomposition; discrimination; economics of education;

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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