The Evolution of the Racial Wage Hierarchy in Post-Apartheid South Africa

Abstract

This article develops a multilateral decomposition procedure for the analysis of wage differentials and applies this to the evolution of the racial wage hierarchy in South Africa over the period 1993–2001. We find evidence that the wage position of the majority African workforce improved relative to all other racial groups immediately following the transition to democratic rule in 1994, but that these gains have been largely eroded in the ensuing years of the post-apartheid era. We review the range of policy initiatives that have been taken by the government since 1994 in the light of our empirical findings.

Notes

Paul Allanson (corresponding author), Department of Economic Studies, University of Dundee, Dundee DD1 4HN, United Kingdom. E-mail: [email protected]. Jonathan Atkins, The Business School, University of Hull, United Kingdom.

An earlier version of this article was presented at the DPRU/FES Conference on ‘Labour Markets and Poverty in South Africa’ in November 2001. It has also benefited from the comments of participants at a seminar given at the Centre for the Study of African Economies at the University of Oxford, and at the Econometric Society European Meeting 2002. The authors would like to thank the Royal Economic Society for financial support under the Small Grant Budget Scheme, and two anonymous referees of the journal.

If an element of

is defined in period t but not in t′ then we assume that

, that is, the difference between the discriminatory and non-discriminatory returns to the characteristic is the same in the two periods. By construction, if an element of

is not defined, then the value of the corresponding element of

will be zero.

Data from the 1993 and 1994 OHSs were not used due to various differences in target population, sample design and methodology, and questionnaire content and wording which render them incompatible with the later surveys for the purpose of this study.

Availability of space prevents the presentation of these wage functions. They can however be obtained from the authors on request.

Given that

, the contribution of a single characteristic i to

may be approximated as

Additional information

Notes on contributors

Paul Allanson

Paul Allanson (corresponding author), Department of Economic Studies, University of Dundee, Dundee DD1 4HN, United Kingdom. E-mail: [email protected]. Jonathan Atkins, The Business School, University of Hull, United Kingdom. An earlier version of this article was presented at the DPRU/FES Conference on ‘Labour Markets and Poverty in South Africa’ in November 2001. It has also benefited from the comments of participants at a seminar given at the Centre for the Study of African Economies at the University of Oxford, and at the Econometric Society European Meeting 2002. The authors would like to thank the Royal Economic Society for financial support under the Small Grant Budget Scheme, and two anonymous referees of the journal.