| Abstract: | ![]()
The earnings premium received by African, urban, male union members in South Africa, as compared to other regular, urban male employees, is explored using two national sample surveys conducted in 1985 and 1993. The historical setting of this change is of particular interest, in the light of the transformation from the apartheid regime. Union membership grew very rapidly during this interval, as earlier prohibitions on African unions were lifted. Subsequently, the high rates of unemployment and segmentation of the labor force have been issues of central concern to the new government, elected in 1994. In this context, the paper extends prior methodology, by systematically comparing possible approaches to estimation, in addition to contributing fresh empirical results. Four approaches to estimation are adopted, allowing for: a single earnings regime with union dummy variable; the possibility of different earnings regimes among union members as compared to non‐members; endogenous switching between such regimes; sample selection arising from lack of employment and from division between regular and informal work. A series of tests on nested specifications indicate the importance of recognizing endogenous switching between differing pay structures in the covered and uncovered sectors. However (as with previous research on the South African labor market), no sample selection is detected with respect to employment status. The results suggest that collective bargaining resulted in wage compression among the expanding union membership while significantly widening the gap between members and non‐members. The latter widening gap cannot be attributed to the changing composition of union membership as reflected in observed characteristics of employees. |
