The effect of real exchange rate volatility on income distribution in South Africa

Goodness C. Aye and Laurence Harris

No wp-2019-29, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: This study investigates the effect of real exchange rate volatility on the distribution of income between labour and capital in South Africa. Both symmetric and asymmetric effects are considered. Using quarterly data for 1985:1-2018:3 and local linear projection, we find that the immediate response of labour's income share to a one standard deviation shock in exchange rate volatility is negative. Moreover, high exchange rate volatility impacts negatively on labour's income share, while low exchange rate volatility impacts positively on labour income.

Keywords: Functional distribution; Income distribution; Economic inequality; Exchange rate; Volatility (search for similar items in EconPapers)
Date: 2019
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