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

12 Pages Posted: 16 Apr 2011

See all articles by Johannes W. Fedderke

Johannes W. Fedderke

Pennsylvania State University - School of International Affairs

Andrew Hill

University of British Columbia (UBC)

Date Written: January 27, 2011

Abstract

This paper presents a joint analysis of labour market flexibility and product market structure. Our investigation confirms earlier results of imperfect competition in South African manufacturing indusry, with an average mark-up of 50% for the period 1970 to 2004, without consistent trend in the mark-up over time. The contribution of the paper is to provide a theoretically grounded means of linking output market conduct to labour market flexibility. We infer the proportion of labour associated with rigidities in the labour market rather than flexible from the mark-up, and find that two thirds of total labour employed in South African manufacturing is associated with rigidities. We find that this proportion falls during the 1980s and rises during the 1990s, suggesting an increase in labour flexibility followed by a decrease.

Keywords: mark-up, industry structure, labour market flexibility

JEL Classification: D43, J29, J69, L60

Suggested Citation

Fedderke, Johannes W. and Hill, Andrew, Industry Structure and Labour Market Flexibility in the South African Manufacturing Sector: A Time Series and Panel Data Approach (January 27, 2011). Available at SSRN: https://ssrn.com/abstract=1809896 or http://dx.doi.org/10.2139/ssrn.1809896

Johannes W. Fedderke (Contact Author)

Pennsylvania State University - School of International Affairs ( email )

Lewis Katz Building
University Park, PA 16802
United States

HOME PAGE: http://sia.psu.edu/faculty/johannes_fedderke

Andrew Hill

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

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