We look at how trade liberalisation, working through product prices, has affected the skill premium in South Africa over the period 1990-2009. Our main finding is that trade liberalisation led to a reduction in prices over this period, and, through prices, mandated a rise in the skill premium of 3.3%. The structure of the skill premium did not stay constant over the period. In the sub-period 1990-1999, trade liberalisation mandated a fall in the skill premium of 10.6% and in the sub-period 2000-2009, trade liberalisation mandated a rise in the skill premium of 11.6%. Our main results are consistent with the sector bias of tariff cuts over these periods, however they do not pass some of the robustness checks that we perform.
About the Authors:
Supervisor, Larence Edwards: Lawrence Edwards is an Associate Professor in the School of Economics, University of Cape Town. Lawrence graduated with a MSc in Economics from the London School of Economics in 1998. He completed his PhD in Economics at the University of Cape Town in 2003.
Lawrence's research falls within the field of international trade with a specific focus on international trade and labour, the determinants of trade flows and economic adjustments to trade liberalisation. He has published in a number of international and local journals including World Development, Journal of International Development, South African Journal of Economics and Journal of Studies in Economics and Econometrics. He has also consulted widely with the World Bank, the National Treasury, the Department of Trade and Industry and is currently a member of the South African Growth Project managed by the Centre of International Development at Harvard University.