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Returns to Race: Labour Market Discrimination in Post-Apartheid South Africa

Author

Listed:
  • Rulof Burger

    () (Department of Economics, Stellenbosch University)

  • Rachel Jafta

    () (Department of Economics, Stellenbosch University)

Abstract

This paper empirically assesses the impact of post-1994 policy making on racial discrimination in the South African labour market. The post-apartheid government has implemented a series of remedial measures, including an ambitious set of black empowerment and affirmative action policies. The first part of the paper gives an overview of the South African labour market post-1994 and the most important legislation, regulations and other measures aimed at redressing the inequalities of the past. We then argue that some assessment of whether the aims of these measures are being achieved is necessary. The empirical part of the paper employs the decomposition techniques of Oaxaca (1973) and Blinder (1973), Brown, Moon and Zoloth (1980) and Juhn, Murphy and Pierce (1991, 1993) to analyse three stages of the employment process: employment, occupational attainment and wage determination. Fifteen nationally representative household surveys are used to compare the evolution of discriminatory hiring and remuneration practices between 1995 and 2004 and across population groups. The results suggest that affirmative action policies have had no observable effect on the racial employment gap, and its impact on the wage distribution is limited to a small narrowing of wages at the top of the wage distribution. There appears to have been a shift away from “pure discrimination” and towards differential returns to education, which is consistent with an increasingly important role for the quality of education in labour market outcomes.

Suggested Citation

  • Rulof Burger & Rachel Jafta, 2006. "Returns to Race: Labour Market Discrimination in Post-Apartheid South Africa," Working Papers 04/2006, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers18
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2006/wp042006/wp-04-2006.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Kahn, Lawrence M, 1991. "Customer Discrimination and Affirmative Action," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 555-571, July.
    2. Servaas van der Berg, 2006. "How effective are poor schools? Poverty and educational outcomes in South Africa," Working Papers 06/2006, Stellenbosch University, Department of Economics.
    3. Sandrine Rospabéa, 2002. "How Did Labour Market Racial Discrimination Evolve After The End Of Apartheid?," South African Journal of Economics, Economic Society of South Africa, vol. 70(1), pages 185-217, March.
    4. Murray Leibbrandt & Haroon Bhorat, 1999. "Modelling Vulnerability and Low Earnings in the South African Labour Market," Working Papers 99032, University of Cape Town, Development Policy Research Unit.
    5. Katherine M. O'Regan & John M. Quigley, 1996. "Teenage Employment and the Spatial Isolation of Minority and Poverty Households," Journal of Human Resources, University of Wisconsin Press, vol. 31(3), pages 692-702.
    6. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    7. D'Amico, Thomas F, 1987. "The Conceit of Labor Market Discrimination," American Economic Review, American Economic Association, vol. 77(2), pages 310-315, May.
    8. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    9. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    10. Randall S. Brown & Marilyn Moon & Barbara S. Zoloth, 1980. "Incorporating Occupational Attainment in Studies of Male-Female Earnings Differentials," Journal of Human Resources, University of Wisconsin Press, vol. 15(1), pages 3-28.
    11. Geeta G. Kingdon & John B. Knight, 2000. "Are searching and non-searching unemployment distinct states when unemployment is high? The case of South Africa," CSAE Working Paper Series 2000-02, Centre for the Study of African Economies, University of Oxford.
    12. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    13. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
    14. Coate, Stephen & Loury, Glenn C, 1993. "Will Affirmative-Action Policies Eliminate Negative Stereotypes?," American Economic Review, American Economic Association, vol. 83(5), pages 1220-1240, December.
    15. William A. Darity & Patrick L. Mason, 1998. "Evidence on Discrimination in Employment: Codes of Color, Codes of Gender," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 63-90, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Maciej, Szelewicki & Tyrowicz, Joanna, 2009. "Labour Market Racial Discrimination in South Africa Revisited," MPRA Paper 16440, University Library of Munich, Germany.
    2. 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.
    3. Martin Abel, 2017. "Labor market discrimination and sorting: Evidence from South Africa," SALDRU Working Papers 205, Southern Africa Labour and Development Research Unit, University of Cape Town.
    4. Andre Hofmeyr, 2010. "Social Networks And Ethnic Niches: An Econometric Analysis Of The Manufacturing Sector In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(1), pages 107-130, March.
    5. Debra Shepherd, 2008. "Post-Apartheid Trends in Gender Discrimination in South Africa: Analysis through Decomposition Techniques," Working Papers 06/2008, Stellenbosch University, Department of Economics.
    6. 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.
    7. Haroon Bhorat & Sumayya Goga, 2012. "The Gender Wage Gap in the Post-apartheid South African Labour Market," Working Papers 12148, University of Cape Town, Development Policy Research Unit.
    8. O'Gorman, Melanie, 2010. "Racial earnings inequality in South Africa: An assessment of policy options," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 703-718, November.
    9. Hélène Maisonnave & Bernard Decaluwé & Margaret Chitiga, 2009. "Does South African Affirmative Action Policy Reduce Poverty? a CGE Analysis," Cahiers de recherche 0936, CIRPEE.
    10. Dieter Von fintel, 2007. "Dealing With Earnings Bracket Responses In Household Surveys - How Sharp Are Midpoint Imputations?," South African Journal of Economics, Economic Society of South Africa, vol. 75(2), pages 293-312, June.

    More about this item

    Keywords

    growth; Discrimination; South Africa;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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