The effect of trade unions on the inequality of wage earnings in South Africa

Master Thesis


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University of Cape Town

The paper begins with an introduction of trade unions in South Africa, focusing on the union membership trend in the last two decades of the twentieth century. This is followed by a review of work on earnings functions and modelling South African trade unions in chapter 2. The aim of this chapter is to show what work has been done in the area of earnings functions and trade unions. It also highlights the contribution of this paper as analysing the role of trade unions in determining earnings inequality and not just earnings levels. Chapter 3 analyses the variables in a trade union model, such as education, location, gender, experience, sector and occupation. Chapter 4 examines the decomposition of the effect of trade unions on the inequality of wage earnings. We find that the result of effect of trade unions on earnings inequality is higher than in comparable international work. The effect is much higher in the general earnings equation with union interactive variables than the equation with a single union dummy. We also find that, for the overall contribution to earnings inequality, education, sector and location have higher contributions in the non-unionised group than the unionised group. This indicates that trade unions have significant effect in dampening the effect of other variables on earnings inequality.

Bibliography: leaves 52-55.