The cost of rigidity: The case of the South African labor market

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Abstract

The South African labor market has been characterized by high and persistent levels of unemployment, and a poor capacity to create jobs. This paper examines existing evidence on what rigidities have generated this outcome. Pricing power in output markets, as well as labor supply and demand side rigidities are all found to have contributed, resulting in excessive increases in real wage costs which under conditions of relatively low economic growth, has produced a stagnant labor market. Policy requirements are the pursuit of stonger economic growth and reductions in real labor costs.

Original languageEnglish (US)
Pages (from-to)809-842
Number of pages34
JournalComparative Economic Studies
Volume54
Issue number4
DOIs
StatePublished - Dec 1 2012

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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