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Modelling cognitive skills, ability and school quality to explain labour market earnings differentials

Author

Listed:
  • Cobus Burger

    (Department of Economics, University of Stellenbosch)

  • Servaas van der Berg

    (Department of Economics, University of Stellenbosch)

Abstract

Attempts to explain wage differences between race groups in South Africa are constrained by the fact that quality of education is known to differ greatly between groups, thus the unexplained portion of the wage gap may be much affected by such differences in education quality. Using a simulation model that utilises school-leaving (matric) examination results and educational attainment levels to generate estimates of education quality, we find that much of the wage gap can indeed be explained by differences in education quality. Thus the unexplained residual, often identified with labour market discrimination, usually greatly over-estimates such discrimination. This emphasises even more strongly the need for greater equity in educational outcomes, particularly in the often unobserved quality of education.

Suggested Citation

  • Cobus Burger & Servaas van der Berg, 2011. "Modelling cognitive skills, ability and school quality to explain labour market earnings differentials," Working Papers 08/2011, Stellenbosch University, Department of Economics.
    • Handle: RePEc:sza:wpaper:wpapers136
    as

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    File URL: https://www.ekon.sun.ac.za/wpapers/2011/wp082011/wp-08-2011.pdf
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    References listed on IDEAS

    as
    1. Geeta Gandhi Kingdon & John Knight, 2004. "Race and the Incidence of Unemployment in South Africa," Review of Development Economics, Wiley Blackwell, vol. 8(2), pages 198-222, May.
    2. Anne Case & Angus Deaton, 1999. "School Inputs and Educational Outcomes in South Africa," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 1047-1084.
    3. Servaas van der Berg & Louise Wood & Neil le Roux, 2002. "Differentiation in black education," Development Southern Africa, Taylor & Francis Journals, vol. 19(2), pages 289-306.
    4. Mia de Vos, 2011. "Quantitative and qualitative aspects of education in South Africa: An analysis using the National Income Dynamic Study," Working Papers 06/2011, Stellenbosch University, Department of Economics.
    5. Anne Case & Motohiro Yogo, 1999. "Does School Quality Matter? Returns to Education and the Characteristics of Schools in South Africa," Working Papers 1999-1, Princeton University. Economics Department..
    6. repec:pri:rpdevs:case_yogo_school_quality is not listed on IDEAS
    7. Doubell Chamberlain & Servaas van der Berg, 2002. "Earnings functions, labour market discrimination and quality of education in South Africa," Working Papers 02/2002, Stellenbosch University, Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Nicola Branson & Julia Garlick & David Lam & Murray Leibbrandt, 2012. "Education and Inequality: The South African Case," SALDRU Working Papers 75, Southern Africa Labour and Development Research Unit, University of Cape Town.

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    More about this item

    Keywords

    South Africa; education quality; wages; labour market; Oaxaca-Blinder decomposition; discrimination; economics of education;
    All these keywords.

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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