The role of educational attainment and quality schooling in reducing racial earnings inequality

Stellenbosch Policy Brief No. 04/2011
 
Publication date: 2011
 
Author(s):
Gideon du Rand
Hendrik van Broekhuizen
Dieter von Fintel
 
Summary:

The removal of racially biased labour market policies and regulations has been a logical move given the discriminatory nature of South Africa’s legislative past. Despite this official levelling of the playing field, the racial distribution of earnings remains unequal. A recent working paper based on household survey data looks beyond racial classification to identify other measurable factors affecting individuals’ earning potential. It confirms that education provides a competitive advantage given the skills shortage in the labour market, manifesting in positive and increasing wage returns on the quantity of education received. Educational attainment is critical, but more pertinently the study finds school quality to be important too, firstly because quality skills lead to additional earnings rewards, and secondly because completing Matric in a quality school increases the chances of entering tertiary education, allowing learners eventually to compete for higher paying jobs. Direct labour market interventions aimed at reducing racial income inequalities have their place, but they do not necessarily treat some of the root causes of the problem. In contrast, policies focused on quality schooling could have a direct, positive impact on the earnings distribution in the long run. In addition, they will complement an important concurrent policy objective aimed at narrowing the skills gap in the labour market to enhance the country’s economic growth potential.

 
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BER Weekly

26 January 2024
Domestically, the theme of the week centred around monetary policy and inflation, with the SA Reserve Bank (SARB) making its first repo rate decision of the year on Thursday. Furthermore, Stats SA released both consumer and producer price inflation data for December. Globally, monetary policy was also important, with the European Central Bank (ECB),...

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