The impact of trade liberalisation on wages in the South African manufacturing sector between 2000 and 2007

Includes bibliographical references.This study investigates the impact of trade liberalization on wages in the manufacturing sector in South Africa between 2000 and 2007. The Stolper - Samuelson theorem predicts that trade liberalisation decreases the relative return of workers employed most intensively in the liberalising industries. We estimate the relationship between trade liberalisation and wages using expanded Mincerian wage regressions that contain measures of protection. In addition, we go beyond the Heckscher - Ohlin - Samuelson framework and investigate whether or not the impact of union bargaining power on wages in a given industry is conditional upon the level of protection. The analysis is conducted using LFS household survey data in combination with average industry tariffs and effective rates of protection. Our findings suggest that trade liberalisation has resulted in a decrease in wages. In addition, we find that the impact of trade liberalisation on wages is dependent on the level of education of a worker. Our findings suggest that relatively unskilled individuals have suffered more from trade liberalisation than those who are relatively skilled. Finally, we find that the impact of union bargaining power on wages in a given industry, is dependent upon the level of protection