Labour Market Racial Discrimination in South Africa Revisited

Szelewicki Maciej and Joanna Tyrowicz

MPRA Paper from University Library of Munich, Germany

Abstract: Discrimination is a significant issue in labour market economics across developed as well as developing countries. In this paper we inquire the actual size of wage discrimination in the Republic of Soutn Africa, accounting for large differences in individual endowments. We apply the Oaxaca-Blinder decomposition as well as propensity score matching to adequately determine the role of discrimination in the wage gaps observed. Although the size of the absolute racial wage gap is enormous, amounting for more than 500%, the actual estimated effect non-attributable to other factors ranges between 45%-55%. This estimator, however, assumes homogenous discrimination across the wage distribution, while data suggest that there are significant educational, sectoral and occupational differentials. To account for these effects, we implement propensity score matching by finding “statistical twins” of the White population among the Black population, thus we demonstrate how wages differ between these groups in comparable labour market situations. Here too we find that wages for the White are on average approximately 30%, while the effects vary at quartiles of the wage distribution.

Keywords: discrimination; Oaxaca-Blinder decomposition; propensity score matching; Republic of South Africa; racial wage gap (search for similar items in EconPapers)
JEL-codes: J08 J71 O12 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-afr and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Labour Market Racial Discrimination in South Africa Revisited (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16440

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