Wage Differentials in South Africa's Labour Market: An analysis using micro-econometric techniques

Abstract
This report investigates the existence of wage differentials between part-time and full-time employees in South Africa. Considering that the sample used was obtained from a non-randomized observational study, the Oaxaca-Blinder Decomposition, the Nopo (2004) Matched Decomposition, Propensity Score Matching and Inverse Probability Weighting techniques were used to obtain estimates of wage differentials. The Oaxaca-Blinder results indicate an unexplained wage premium of R 49.25 to part-time employment which dominates the portion attributable to differences in observed endowments. The Nopo Matched Decomposition results indicate an hourly wage premium of R 47.22, with Endowment explaining 20.97% of the observed pay gap. Using Propensity Score Matching, an hourly wage premium to part-time workers of R47.22 was obtained before matching and R50.90 after matching is achieved. The IPW technique yields a wage premium to part-time workers of R47.9 when using the Average Treatment Effect (ATE) as the weight and R52.93 when the Average Treatment Effect on the Treated (ATT) is used.
Description
Keywords
Wage differential, Decomposition, Propensity Score Matching
Citation
Razak, A., Kaninda, A., Chetty, D., & Kilimani, N. Wage Differentials in South Africa's Labour Market: An analysis using micro-econometric techniques.