Working papers & works in progress

Selected works in progress

(very provisional titles)

Rent sharing, wage floors and development with Ihsaan Bassier
[Latest version | WIDER working paper]
Faced with more favorable demand conditions, many firms raise wages. However, we show that firms with labour market power, lower productivity, and binding wage floors will absorb these positive revenue-productivity shocks as excess profits instead of increasing wages or employment. Our prediction follows from a simple but novel theoretical insight under a standard framework of monopsonistic competition, and we empirically test this theory in South Africa using firm-level administrative data. We first explain how firm wage-setting behavior changes at a productivity threshold directly related to the wage floor, and then show how the predicted wage, employment and profit patterns are evident in the cross-section of firms covered by collective bargaining agreements. We then replicate and extend a leading method of identifying rent-sharing elasticities, but estimated separately by firm revenue-productivity bins. As predicted by the theory, we find that firms below the threshold increase wages and employment less, and profits more, in response to revenue-productivity shocks, and that there is a break at the threshold where wage floors bind. The study complicates the conclusions emerging from the literature on firm rent-sharing, and forms part of an explanation for “stalled” development and “jobless growth”.

Surviving in the dark: the mortality effects of reducing rolling blackouts in Cape Town, South Africa
Funded by UNU-WIDER as part of the SA-TIED programme.

Working Papers

Stimulus effects of a large public employment programme with Ihsaan Bassier
[January 2024 version | Op-Ed]
Media: CNBC Africa, Newzroom Afrika

Social Distress and (Some) Relief: Estimating the impact of pandemic job loss on poverty in South Africa with Ihsaan Bassier and Maya Goldman
Accepted, International Journal of Microsimulation
[July 2022 version]

Estimating employment responses to South Africa’s Employment Tax Incentive with Amina Ebrahim
[July 2021 version]

Markups and market structure in South Africa: What can be learnt from new administrative data?
[August 2019 version]

South African poverty lines: A review and two new money-metric thresholds with Murray Leibbrandt and Ingrid Woolard
[August 2015 version | Op-Ed]