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Citation Information

Type Thesis or Dissertation - PhD thesis
Title An investigation of the labour market determinants of income dynamics for a highly unequal society: The South African case
Author(s)
Publication (Day/Month/Year) 2019
URL file:///C:/Users/Training.DATAFIRST.014/Downloads/malindi_labour_2019 (1).pdf
Abstract
South Africa ranks as the country with the highest income inequality in the world. Inequality of labour market outcomes drives most of this inequality. Labour market success (or failure) is a crucial determinant of where an individual or household is positioned on the income distribution. Furthermore, labour market outcomes in South Africa are characterised by a strong racial and gender hierarchy. Black women are on many levels the most disadvantaged with the lowest average earnings, highest unemployment, lower level of skill attainment, etc. They are consequently located at the bottom of this hierarchy regarding labour market outcomes. White men, on the other hand, are the most advantaged and are thus located at the top of this hierarchy.

Differences in labour market outcomes in South Africa have spawned a large body of literature that identifies pre-labour and labour market differences in the accumulation of and returns to human capital as the key determinants of labour market inequality. A smaller strand of the literature points to labour market discrimination and barriers to entry into wage employment as contributing factors to the inequality of labour market outcomes in South Africa. This dissertation contributes to both strands of the literature. It contributes to the first strand of the literature by investigating the two critical components of the dynamic structure of wages. This includes the wage returns to labour market experience and job tenure for different demographic groups. On-the-job training as a means of human capital investment and a source of inequality is mostly ignored in the South African literature on differences in labour market outcomes. The dissertation adds theoretical and empirical evidence of the importance of information
asymmetry and statistical discrimination in the barriers to entry and labour market discrimination literature, respectively.

The empirical evidence presented in this dissertation is based on rigorous implementation and adaption of micro-econometric techniques to a nationally representative household South African panel dataset. The overall result points to better labour market outcomes for black
workers regarding higher wage growth. This is due to the accumulation of on-the-job training and subsequent resolving of uncertainty regarding their expected productivity. This result is contrary to the stereotypical racial and gender hierarchy that sees black workers having inferior labour market outcomes. Additionally, this motivates the observed decline in inter-racial income inequality and the rise in intra-racial income inequality, especially amongst the black population.

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Copyright DataFirst, University of Cape Town