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A Multilateral Decomposition of Racial Wage Differentials in the 1994 South African Labour Market

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  • Paul Allanson
  • Jonathan Atkins
  • Timothy Hinks

Abstract

This article develops a new multilateral decomposition procedure for the analysis of wage differentials and applies this to the racial wage hierarchy in the South African labour market. Using micro-data on male workers from the 1994 October Household survey, it is found that whites received the highest wages followed by Asians, then coloureds and finally blacks. Productivity differences are shown to explain approximately two-thirds of the white and black wage differentials, with the unexplained residuals attributable to discriminatory overpayment of whites and underpayment of blacks, and virtually all of the Asian and coloured differentials. The results provide the basis for a discussion of post-apartheid policy initiatives to tackle racial inequalities in the labour market.
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Suggested Citation

  • Paul Allanson & Jonathan Atkins & Timothy Hinks, 1999. "A Multilateral Decomposition of Racial Wage Differentials in the 1994 South African Labour Market," Dundee Discussion Papers in Economics 099, Economic Studies, University of Dundee.
    • Handle: RePEc:dun:dpaper:099
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    References listed on IDEAS

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    1. Lanot, Gauthier & Walker, Ian, 1998. "The union/non-union wage differential: An application of semi-parametric methods," Journal of Econometrics, Elsevier, vol. 84(2), pages 327-349, June.
    2. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
    3. Banerjee, Biswajit & Knight, J. B., 1985. "Caste discrimination in the Indian urban labour market," Journal of Development Economics, Elsevier, vol. 17(3), pages 277-307, April.
    4. Polachek,Solomon W. & Siebert,W. Stanley, 1993. "The Economics of Earnings," Cambridge Books, Cambridge University Press, number 9780521367288, September.
    5. L. Human & M. J. Greenacre*, 1987. "Labour Market Discrimination in the Manufacturing Sector: The Impact of Race, Gender, Education and Age on Income," South African Journal of Economics, Economic Society of South Africa, vol. 55(2), pages 98-106, June.
    6. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    Cited by:

    1. Paul Allanson & Jonathan Atkins, 2003. "Accounting for the Persistence of Racial Wage Differences in Post- Apartheid South Africa," Dundee Discussion Papers in Economics 157, Economic Studies, University of Dundee.
    2. Paul Allanson & Jonathan Atkins, 2005. "The Evolution of the Racial Wage Hierarchy in Post-Apartheid South Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 41(6), pages 1023-1050.
    3. Paul Allanson & Jonathan Atkins & Timothy Hinks, 2000. "Did the end of Apartheid spell the beginning of the end for the racial wage hierarchy in South Africa? A multilateral analysis of racial wage differentials in the early post- apartheid period," Dundee Discussion Papers in Economics 118, Economic Studies, University of Dundee.
    4. Carlos Gradín, 2019. "Occupational segregation by race in South Africa after apartheid," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 553-576, May.
    5. Azam, Jean-Paul & Rospabe, Sandrine, 2007. "Trade unions vs. statistical discrimination: Theory and application to post-apartheid South Africa," Journal of Development Economics, Elsevier, vol. 84(1), pages 417-444, September.
    6. Carlos Gradín, 2019. "Occupational segregation by race in South Africa after apartheid," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 553-576, May.

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