YOUTH UNEMPLOYMENT, FIRM SIZE AND RESERVATION WAGES IN SOUTH AFRICA

Neil Rankin · Gareth Roberts

73 citations0/0 files storedSouth African Journal of Economics

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Labor market dynamics and wage inequality Higher Education and Employability Education and Labor Relations

Abstract

Abstract The level of youth unemployment in South Africa is much higher than in comparator countries. We investigate whether one of the reasons may be that the wages young people want or need are above those that they could reasonably expect to earn given their characteristics. Unlike previous work on the relationship between reservation wages and unemployment we differentiate between wages in different sizes of firms. Larger firms pay more and thus, even if reservation wages are similar to average predicted wages, they may be above the wages that young people could expect to earn in smaller firms. We find that this is the case.

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References

1998Wage Differentials, Employer Size, and Unemployment 2004Unemployment in South Africa: The Nature of the Beast 1984An Equilibrium Model of Search Unemployment 2008Why has unemployment risen in the New South Africa?1 1979An Equilibrium Analysis of Search and Breach of Contract, I: Steady States 2007Unemployment in South Africa, 1995 2003: Causes, Problems and Policies 1979Job Matchings with State Employment Agencies and Random Search 2006Empirical labor search: A survey

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