Labor Unions and the Distribution of Wages and Employment in South Africa

Posted: 25 Sep 1998

See all articles by T. Paul Schultz

T. Paul Schultz

Yale University - Economic Growth Center; IZA Institute of Labor Economics

Germano Mwabu

University of Nairobi - Department of Economics

Abstract

Few countries have higher wage inequality than South Africa, where wages of African and white workers differ by a factor of five. Using survey data collected in 1993, the authors analyze the complex effect of unions on this wage gap. Among male African workers in the bottom decile of the wage distribution, union membership was associated with wages that were 145% higher than those of comparable non-union workers, and among those in the top decile the differential was 19%. Regression estimates also indicate that returns to observed productive characteristics of workers, such as education and experience, were larger for non-union than union workers. If the large union relative wage effect were cut in half, the authors estimate that employment of African youth, age 16-29, would increase by two percentage points, and their labor force participation rate would also increase substantially.

JEL Classification: J15, J21, J31, J51, J71

Suggested Citation

Schultz, T. Paul and Mwabu, Germano, Labor Unions and the Distribution of Wages and Employment in South Africa. Available at SSRN: https://ssrn.com/abstract=89010

T. Paul Schultz (Contact Author)

Yale University - Economic Growth Center ( email )

Box 208269
New Haven, CT 06520-8269
United States
203-432-3620 (Phone)
203-432-5591 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Germano Mwabu

University of Nairobi - Department of Economics ( email )

P.O. Box 30197
Nairobi
Kenya
2542226451 (Phone)

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