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

Stellenbosch Working Paper Series No. WP04/2006
 
Publication date: 2006
 
Author(s):
[protected email address] (Department of Economics, Stellenbosch University)
[protected email address] (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.

 
JEL Classification:

j31, j71

Keywords:

growth, Discrimination, South Africa

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As is often the case, domestic financial markets largely ignored local developments, including a lower-than-expected January consumer inflation print, last week and were swept along by the intensification of the global reflation trade. Outside of the inflation release, the domestic data releases continued to show that there was still some recovery momentum...

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