Higher residual wage dispersion for white workers in post apartheid South Africa, 1995-2006: composition effects or higher skill prices?

Richard U. Agesa, Jacqueline Agesa and Geoffrey Bongani ()
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Geoffrey Bongani: Marshall University, USA

Journal of Developing Areas, 2010, vol. 44, issue 1, 71-100

Abstract: Apartheid in South Africa ensured whites received more and better-quality schooling relative to Africans, coloreds, and Asians. It is hence conceivable, consistent with human-capital theory whites would receive relatively higher prices to their measured human-capital skills and would have higher dispersion of their unmeasured human-capital skills. We test this hypothesis. Specifically, we employ a semiparametric procedure to decompose 1995-2006 racial wage differences into regression coefficients, covariates and residuals and extend the literature by decomposing residuals into unmeasured skills and skill prices. Our findings support the theory: whites receive relatively higher prices to measured skills and have relatively higher dispersion of unmeasured skills, with the latter attributed to higher prices of unmeasured skills. We suggest better-quality schooling yielded higher returns to measured human-capital attributes for whites, and higher skills enabled whites to benefit more from on-the-job-training resulting in higher dispersion of their unmeasured human-capital attributes.

Keywords: Race; Wage differences; Residual wage dispersion; South Africa (search for similar items in EconPapers)
JEL-codes: J31 O15 O55 (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.44:year:2011:issue1:pp:71-100

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