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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Do unions matter? Trade reform and manufacturing wages in South Africa
Author:Shendy, RihamISNI
Year:2010
Periodical:Journal of African Economies (ISSN 0963-8024)
Volume:19
Issue:2
Pages:163-204
Language:English
Geographic term:South Africa
Subjects:wages
collective bargaining
tariffs
wage policy
trade policy
External link:https://jae.oxfordjournals.org/content/19/2/163.full.pdf
Abstract:The effect of nominal tariff cuts on industry wage differentials has been the subject of a number of recent empirical studies. The author investigates the latter relationship with respect to the South African trade reform experience using micro-level labour data for the period from 1995 to 2004. He extends on the existing literature in two respects: first, he is the first controlling for the potential effect of labour market institutions, such as collective bargaining power, in assessing the relationship between tariffs and industry wages. Second, he accounts for general equilibrium effects by controlling for the impact of changes in effective tariff rates. On the one hand, he finds that only wages in industries with levels of unionization beyond a certain threshold were adversely affected by tariff cuts. This negative effect is exacerbated by the extent of sectoral union power. The reported large magnitudes of the tariff impact on wages is in line with the considerably high mark-ups documented for South Africa. On the other hand he finds some evidence suggesting that wages in industries with union power below the threshold were positively affected by the tariff cuts. This evidence suggests the omitted variable bias resulting from not controlling for industry heterogeneities in bargaining power when examining the wage-trade relationship. Bibliogr., notes, ref., sum. [Journal abstract]
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