Estimating the effect of racial classifcation on labour market outcomes: A case study from Apartheid South Africa

Miquel Pellicer and Vimal Ranchhod ()
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Vimal Ranchhod: School of Economics and SALDRU, University of Cape Town

Economics Department Working Paper Series from Department of Economics, National University of Ireland - Maynooth

Abstract: Most empirical studies on discrimination focus on the differential treatment in the labour market of people of equal productivity. However, if discrimina-tion over the life-cycle affects productivity, then these estimates do not capture the full impact of discrimination on labour market outcomes. We study the cu-mulative effect of discrimination for the (extreme) case of South Africa during apartheid. South Africa's apartheid government implemented a comprehensive system of discrimination against "non-Whites" that covered every major facet of life and was designed to create productivity differentials across race groups. We quantify the cumulative effect of all of these forms of discrimination by esti-mating the causal effect of being classified as White on education, employment and income. Our identification strategy is based on a policy change that privileged ancestry over appearance in the process of racial classification for those born after the 1951 Census. We use census data from 1980, 1991, and 1996, and restrict our sample to Whites and "Coloureds". The data exhibits a discontinuity as well as a change in the trend of racial shares for cohorts born after 1951. Combined, these imply a 6 percentage point lower likelihood of being classified as White for people born 10 years after 1951. Our preferred estimates indicate that being classified as White instead of "Coloured" resulted in a more than threefold increase in income for men. This corresponds to approximately 65% of the difference in mean incomes between the two population groups. Our findings for women are inconclusive.

Keywords: Discrimination; South Africa; Education; Income (search for similar items in EconPapers)
JEL-codes: E24 J15 J7 N37 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2020
New Economics Papers: this item is included in nep-dev, nep-lab and nep-mac
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Working Paper: Estimating the effect of racial classification on labour market outcomes: A case study from Apartheid South Africa (2020)
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