Wage Subsidy and Labor Market Flexibility in South Africa

Go, Delfin S.; Kearney, Marna; Korman, Vijdan; Robinson, Sherman; Thierfelder, Karen

dc.creator	Go, Delfin S.
dc.creator	Kearney, Marna
dc.creator	Korman, Vijdan
dc.creator	Robinson, Sherman
dc.creator	Thierfelder, Karen
dc.date	2012-03-19T19:09:24Z
dc.date	2012-03-19T19:09:24Z
dc.date	2009-03-01
dc.date.accessioned	2023-02-17T21:08:33Z
dc.date.available	2023-02-17T21:08:33Z
dc.identifier	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090323092541
dc.identifier	http://hdl.handle.net/10986/4066
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/245044
dc.description	In this paper, the authors use a highly disaggregate general equilibrium model to analyze the feasibility of a wage subsidy to unskilled workers in South Africa, isolating and estimating its potential employment effects and fiscal cost. They capture the structural characteristics of the labor market with several labor categories and substitution possibilities, linking the economy-wide results on relative prices, wages, and employment to a micro-simulation model with occupational choice probabilities in order to investigate the poverty and distributional consequences of the policy. The impact of a wage subsidy on employment, poverty, and inequality in South Africa depends greatly on the elasticities of substitution of factors of production, being very minimal if unskilled and skilled labor are complements in production. The desired results are attainable only if there is sufficient flexibility in the labor market. Although the impact in a low case scenario can be improved by supporting policies that relax the skill constraint and increase the production capacity of the economy especially towards labor-intensive sectors, the gains from a wage subsidy are still modest if the labor market remains very rigid.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 4871
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCOUNTING
dc.subject	ADJUSTMENT PROCESS
dc.subject	AGGREGATE DEMAND
dc.subject	AGGREGATE INCOME
dc.subject	AGRICULTURE
dc.subject	ANNUAL EARNINGS
dc.subject	ANNUAL INCOME
dc.subject	ANNUAL WAGE
dc.subject	AVERAGE EARNINGS
dc.subject	AVERAGE GROWTH
dc.subject	AVERAGE WAGE
dc.subject	AVERAGE WAGES
dc.subject	BENCHMARK
dc.subject	BENEFICIARIES
dc.subject	CALCULATIONS
dc.subject	CLERKS
dc.subject	COLLEGE DEGREE
dc.subject	COMMODITIES
dc.subject	CONCENTRATION RATIOS
dc.subject	CONSUMPTION EXPENDITURES
dc.subject	CONTRIBUTION
dc.subject	DEVELOPMENT POLICY
dc.subject	DISCOURAGED WORKERS
dc.subject	DOMESTIC WORKERS
dc.subject	EARNING
dc.subject	EARNINGS
dc.subject	ECONOMETRIC ANALYSIS
dc.subject	ECONOMETRIC MODELING
dc.subject	ECONOMETRICS
dc.subject	ECONOMIC ACTIVITIES
dc.subject	ECONOMIC ACTIVITY
dc.subject	ECONOMIC ANALYSIS
dc.subject	ECONOMIC FRAMEWORK
dc.subject	ECONOMIC GROWTH
dc.subject	ECONOMIC MANAGEMENT
dc.subject	ECONOMIC PERFORMANCE
dc.subject	ECONOMIC RESEARCH
dc.subject	ECONOMIC SECTORS
dc.subject	ECONOMIC STRUCTURE
dc.subject	ECONOMICS
dc.subject	ELASTICITY
dc.subject	ELASTICITY OF SUBSTITUTION
dc.subject	EMPLOYEE
dc.subject	EMPLOYMENT
dc.subject	EMPLOYMENT EFFECT
dc.subject	EMPLOYMENT EFFECTS
dc.subject	EMPLOYMENT GROWTH
dc.subject	EMPLOYMENT IMPACT
dc.subject	EMPLOYMENT IMPACTS
dc.subject	EMPLOYMENT INCREASES
dc.subject	EMPLOYMENT LEVEL
dc.subject	EMPLOYMENT POLICY
dc.subject	EMPLOYMENT STATUS
dc.subject	EMPLOYMENT TRENDS
dc.subject	EQUILIBRIUM UNEMPLOYMENT
dc.subject	EXCHANGE RATE
dc.subject	EXPORTS
dc.subject	FACTOR DEMAND
dc.subject	FACTOR MARKETS
dc.subject	FAMILY MEMBER
dc.subject	FEMALE WORKERS
dc.subject	FINANCIAL SECTORS
dc.subject	FINANCIAL SERVICES
dc.subject	FIRM SURVEY
dc.subject	FORMAL LABOR MARKET
dc.subject	FUTURE RESEARCH
dc.subject	GDP
dc.subject	GENERAL EQUILIBRIUM
dc.subject	GENERAL EQUILIBRIUM ANALYSIS
dc.subject	GINI COEFFICIENT
dc.subject	GROSS DOMESTIC PRODUCT
dc.subject	HIGH UNEMPLOYMENT
dc.subject	HIGH UNEMPLOYMENT RATES
dc.subject	HOUSEHOLD CONSUMPTION
dc.subject	HOUSEHOLD EXPENDITURE
dc.subject	HOUSEHOLD EXPENDITURES
dc.subject	HOUSEHOLD INCOME
dc.subject	HOUSEHOLD INCOMES
dc.subject	HOUSEHOLD SURVEY
dc.subject	HUMAN CAPITAL
dc.subject	IMPERFECT COMPETITION
dc.subject	INCENTIVE EFFECTS
dc.subject	INCOME DISTRIBUTION
dc.subject	INCOME GROUP
dc.subject	INCOME GROUPS
dc.subject	INCOME SOURCES
dc.subject	INCOME TAX
dc.subject	INCOME TAXES
dc.subject	INCOMES
dc.subject	INEQUALITY
dc.subject	INFORMAL ECONOMY
dc.subject	INFORMAL SECTOR
dc.subject	INFORMAL SECTOR WORKERS
dc.subject	INVENTORY
dc.subject	JOB SEARCH
dc.subject	JOBS
dc.subject	LABOR COST
dc.subject	LABOR COSTS
dc.subject	LABOR DEMAND
dc.subject	LABOR FORCE
dc.subject	LABOR FORCE GROWTH
dc.subject	LABOR MARKET
dc.subject	LABOR MARKET CONDITIONS
dc.subject	LABOR MARKET FLEXIBILITY
dc.subject	LABOR MARKET INSTITUTIONS
dc.subject	LABOR MARKET ISSUES
dc.subject	LABOR MARKET OUTCOMES
dc.subject	LABOR MARKET PROBLEMS
dc.subject	LABOR MARKET RIGIDITIES
dc.subject	LABOR MARKET RIGIDITY
dc.subject	LABOR MARKET SITUATION
dc.subject	LABOR MARKETS
dc.subject	LABOR MOBILITY
dc.subject	LABOR ORGANIZATION
dc.subject	LABOR POLICY
dc.subject	LABOR REGULATIONS
dc.subject	LABOR RELATIONS
dc.subject	LABOR SUPPLY
dc.subject	LABOR UNIONS
dc.subject	LABOUR
dc.subject	LABOUR DEMAND
dc.subject	LABOUR FORCE
dc.subject	LABOUR MARKET
dc.subject	LABOUR MARKETS
dc.subject	LEVEL OF EDUCATION
dc.subject	LUMP SUM
dc.subject	MACROECONOMIC ADJUSTMENT
dc.subject	MACROECONOMIC MANAGEMENT
dc.subject	MACROECONOMICS
dc.subject	MALE WORKERS
dc.subject	MANUFACTURING INDUSTRY
dc.subject	MARKET WAGE
dc.subject	MARKET WAGES
dc.subject	MARRIED COUPLES
dc.subject	MINIMUM WAGE
dc.subject	MINIMUM WAGES
dc.subject	MULTIPLIERS
dc.subject	NEW JOB
dc.subject	NEW JOBS
dc.subject	OCCUPATION
dc.subject	OCCUPATIONS
dc.subject	OPEN ECONOMIES
dc.subject	PAID WORKERS
dc.subject	PENSION
dc.subject	PER CAPITA INCOME
dc.subject	PERMANENT WORKERS
dc.subject	POVERTY LEVELS
dc.subject	POVERTY RATE
dc.subject	POVERTY RATES
dc.subject	PRELIMINARY EVIDENCE
dc.subject	PRESENT ANALYSIS
dc.subject	PRESENT STUDY
dc.subject	PRIVATE INVESTMENT
dc.subject	PRIVATE SAVINGS
dc.subject	PROBABILITIES
dc.subject	PROBABILITY
dc.subject	PRODUCTION CAPACITY
dc.subject	PRODUCTION FUNCTION
dc.subject	PRODUCTION INCREASES
dc.subject	PRODUCTION PROCESS
dc.subject	PRODUCTIVITY
dc.subject	PRODUCTIVITY GROWTH
dc.subject	PUBLIC EXPENDITURES
dc.subject	PUBLIC SERVICES
dc.subject	REAL GDP
dc.subject	REAL WAGE
dc.subject	REAL WAGES
dc.subject	RETAIL TRADE
dc.subject	RURAL POVERTY
dc.subject	SALES
dc.subject	SAVINGS
dc.subject	SCALE EFFECTS
dc.subject	SELF-EMPLOYMENT
dc.subject	SELF-EMPLOYMENT INCOME
dc.subject	SEMISKILLED WORKERS
dc.subject	SENIOR
dc.subject	SERVICE SECTOR
dc.subject	SERVICE SECTORS
dc.subject	SKILL GROUPS
dc.subject	SKILL TYPE
dc.subject	SKILLED LABOR
dc.subject	SKILLED WORKER
dc.subject	SOCIAL SECURITY
dc.subject	STRUCTURAL CHANGE
dc.subject	STRUCTURAL UNEMPLOYMENT
dc.subject	SUBSIDIZED JOB
dc.subject	SUM OF MONEY
dc.subject	TAX RATE
dc.subject	TAX REVENUES
dc.subject	TAXATION
dc.subject	TECHNICAL ASSISTANCE
dc.subject	TEMPORARY WORKERS
dc.subject	TOTAL EMPLOYMENT
dc.subject	TOTAL LABOR FORCE
dc.subject	TOTAL WAGE
dc.subject	TRADE LIBERALIZATION
dc.subject	TRADE POLICIES
dc.subject	TRAINING PROGRAMS
dc.subject	UNEMPLOYED
dc.subject	UNEMPLOYED INDIVIDUAL
dc.subject	UNEMPLOYED INDIVIDUALS
dc.subject	UNEMPLOYED PEOPLE
dc.subject	UNEMPLOYMENT
dc.subject	UNEMPLOYMENT PROBLEM
dc.subject	UNEMPLOYMENT RATE
dc.subject	UNION MEMBERSHIP
dc.subject	UNSKILLED WORKERS
dc.subject	VALUE ADDED
dc.subject	VOCATIONAL SCHOOL
dc.subject	VOLUNTARY UNEMPLOYMENT
dc.subject	WAGE BILL
dc.subject	WAGE COST
dc.subject	WAGE DIFFERENTIALS
dc.subject	WAGE EMPLOYMENT
dc.subject	WAGE FLEXIBILITY
dc.subject	WAGE GAINS
dc.subject	WAGE INCREASES
dc.subject	WAGE LEVEL
dc.subject	WAGE SUBSIDIES
dc.subject	WAGE SUBSIDY
dc.subject	WAGE SUBSIDY SCHEME
dc.subject	WORK EXPERIENCE
dc.subject	WORK FORCE
dc.subject	WORKING POOR
dc.subject	WTO
dc.title	Wage Subsidy and Labor Market Flexibility in South Africa
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	Africa
dc.coverage	Africa
dc.coverage	Southern Africa