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Real wages, employment and macroeconomic policy in a structuralist model for South Africa

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  • B Gibson
  • D van Seventer

Abstract

It is now commonplace to argue that in South Africa, like many developing countries, higher wages will lower employment. This paper shows that it is difficult to extricate the relationship between wages, employment and output from the macropolicy environment. Dynamic computable general equilibrium simulations show that the employment effects of nominal wage increases depends on induced monetary and fiscal policy when there is monetary 'policy dominance'. While wage-led growth is inefficient, increasing the wages of unskilled workers can improve the distribution of income, when the induced changes are neutralised.

Suggested Citation

  • B Gibson & D van Seventer, 2000. "Real wages, employment and macroeconomic policy in a structuralist model for South Africa," Journal of African Economies, Centre for the Study of African Economies, vol. 9(4), pages 512-546.
    • Handle: RePEc:oup:jafrec:v:9:y:2000:i:4:p:512-546.
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    File URL: http://hdl.handle.net/10.1093/jae/9.4.512
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    Citations

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    Cited by:

    1. Pauw, Karl & Leibbrandt, Murray, 2012. "Minimum Wages and Household Poverty: General Equilibrium Macro–Micro Simulations for South Africa," World Development, Elsevier, vol. 40(4), pages 771-783.
    2. Lekunze, Joseph Nembo & Luvhengo, Usapfa & Shoko, Rangarirai Roy, 2016. "Structural Analysis Of Minimum Wage Rates, Unemployment And Food Prices Of Farm Workers In South Africa: Co-Integration Approach," Journal of Agribusiness and Rural Development, University of Life Sciences, Poznan, Poland, vol. 42(4).
    3. Seguino, Stephanie, 2003. "Taking gender differences in bargaining power seriously: Equity, labor standards, and living wages," MPRA Paper 6508, University Library of Munich, Germany, revised Oct 2003.
    4. Arne Heise, 2007. "Institutions, market constellations and growth: The case of South Africa," Annals of Economics and Finance, Society for AEF, vol. 8(2), pages 313-340, November.
    5. Rhys Jenkins, 2006. "Contrasting perspectives on globalization and labour in South Africa," Progress in Development Studies, , vol. 6(3), pages 185-200, July.
    6. Gerald Epstein, 2002. "Employment-Oriented Central Bank Policy in an Integrated World Economy: A Reform Proposal for South Africa," Working Papers wp39, Political Economy Research Institute, University of Massachusetts at Amherst.

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