Evaluating the general equilibrium effects of a wage subsidy scheme for South Africa

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Periodical article

Title:	Evaluating the general equilibrium effects of a wage subsidy scheme for South Africa
Authors:	Pauw, Kalie Edwards, Lawrence
Year:	2006
Periodical:	South African Journal of Economics
Volume:	74
Issue:	3
Pages:	442-462
Language:	English
Geographic term:	South Africa
Subjects:	employment creation subsidies labour policy
External link:	https://onlinelibrary.wiley.com/doi/10.1111/j.1813-6982.2006.00082.x/pdf
Abstract:	Unemployment among semi- and unskilled labour in South Africa has reached severe proportions (over 50 percent) and threatens the political and economic stability of the South African economy. In this paper a computable general equilibrium (CGE) model of the South African economy is used to assess the effectiveness of a wage subsidy in raising employment of semi- and unskilled workers. The authors find that employment of semi- and unskilled workers can be raised quite significantly. Further, the wage subsidy scheme compares favourably with alternative welfare grant schemes in terms of employment growth. However, the results are sensitive to the targeting of sectors and the substitutability between labour of different skill levels. Bibliogr., notes, ref., sum. [Journal abstract]