Macroeconomics Commons^™

Labour Market Racial Discrimination In South Africa Revisited, Joanna Tyrowicz, Maciej Szelewicki

Joanna Tyrowicz

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 endowments. We apply the Oaxaca-Blinder decomposition as well as propensity score matching to adequately determine the size of the pay gap. Although the size of the absolute racial pay 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 …