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Wage inequality, firm characteristics, and firm wage premia in South Africa

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  • Shakeba Foster

Abstract

This paper investigates the role of firm characteristics in driving wage inequality and firm wage premia in the South African labour market. The Abowd, Kramarz, and Margolis (AKM) and Kline, Saggio, and Sølvsten (KSS) regression-based decomposition methods are applied to matched employer-employee administrative tax data for the period 2011-19. Additionally, the Theil index is used as a comparative tool for estimating wage inequality, given that the variance of logarithms applied in the regression-based decomposition methods has been established as an imprecise measure of inequality.

Suggested Citation

  • Shakeba Foster, 2023. "Wage inequality, firm characteristics, and firm wage premia in South Africa," WIDER Working Paper Series wp-2023-131, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2023-131
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    File URL: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2023-131-wage-inequality-firm-characteristics-firm-wage-premia-South-Africa.pdf
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    References listed on IDEAS

    as
    1. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 967-1015.
    2. Jae Song & David J Price & Fatih Guvenen & Nicholas Bloom & Till von Wachter, 2019. "Firming Up Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 1-50.
    3. Egger, Hartmut & Egger, Peter & Kreickemeier, Udo & Moser, Christoph, 2020. "The exporter wage premium when firms and workers are heterogeneous," European Economic Review, Elsevier, vol. 130(C).
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    5. James E. Foster & Efe A. Ok, 1999. "Lorenz Dominance and the Variance of Logarithms," Econometrica, Econometric Society, vol. 67(4), pages 901-908, July.
    6. Marlies Piek & Dieter von Fintel, 2020. "Sectoral minimum wages in South Africa: Disemployment by firm size and trade exposure," Development Southern Africa, Taylor & Francis Journals, vol. 37(3), pages 462-482, May.
    7. Clemens Ohlert, 2016. "Establishment heterogeneity, rent sharing and the rise of wage inequality in Germany," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(2), pages 210-228, May.
    8. Martin Wittenberg, 2017. "Wages and Wage Inequality in South Africa 1994–2011: Part 2 – Inequality Measurement and Trends," South African Journal of Economics, Economic Society of South Africa, vol. 85(2), pages 298-318, June.
    9. Daniel Schaefer & Carl Singleton, 2020. "Recent Changes in British Wage Inequality: Evidence from Large Firms and Occupations," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(1), pages 100-125, February.
    Full references (including those not matched with items on IDEAS)

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