Wage subsidy and labor market flexibility in South Africa

"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...

Full description

Bibliographic Details
Main Author: Go, Delfin S.
Corporate Author: World Bank
Format: eBook
Language:English
Published: [Washington, D.C] World Bank 2009
Series:Policy research working paper
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
LEADER 02231nmm a2200253 u 4500
001 EB002099289
003 EBX01000000000000001239379
005 00000000000000.0
007 cr|||||||||||||||||||||
008 221013 ||| eng
100 1 |a Go, Delfin S. 
245 0 0 |a Wage subsidy and labor market flexibility in South Africa  |h Elektronische Ressource  |c Delfin S. Go, Marna Kearney, Vijdan Korman, Sherman Robinson, Karen Thierfelder 
260 |a [Washington, D.C]  |b World Bank  |c 2009 
653 |a Unskilled labor / South Africa 
653 |a Labor market / South Africa 
710 2 |a World Bank 
041 0 7 |a eng  |2 ISO 639-2 
989 |b WOBA  |a World Bank E-Library Archive 
490 0 |a Policy research working paper 
500 |a Includes bibliographical references. - Title from PDF file as viewed on 5/7/2009 
028 5 0 |a 10.1596/1813-9450-4871 
856 4 0 |u http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-4871  |x Verlag  |3 Volltext 
082 0 |a 330 
520 |a "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. "--World Bank web site