Phillips ‘loops’ in South Africa∗

Extract from unpublished Master's degree dissertation, ‘Phlllipskurweverbande in Suid‐Afrika’, UPE 1986, by G S Horn.

Abstract

Professor Phillips published his famous Phillips curve article in 1958. In his research, however, he observed that wages were rising more rapidly during the upswing of the business cycle, when unemployment was falling, than during the downturn, when unemployment was rising. When data on the respective variables was plotted, a distinct ‘loop’ was found. In the analysis of South African labour statistics, it was found that such a ‘loop’ existed in the White labour market. However, in the case of the Black labour market, only a weak image of a ‘loop’ was found. The real economic forces producing such a ‘loop’ were almost completely absent. This has implications not only for labour management and economic policy in general, but also for development strategies, because it implies that if Black labour had been left to market forces only, they would have been worse off than they are now.

Notes

Extract from unpublished Master's degree dissertation, ‘Phlllipskurweverbande in Suid‐Afrika’, UPE 1986, by G S Horn.

Respectively professor and lecturer in Economics at Vista University, Port Elizabeth.