Wörgötter, A., & Nomdebevana, S. (2020). Aggregate Public-Private Remuneration Patterns in South Africa. Atlantic Economic Journal, 48(4), 461–474. https://doi.org/10.1007/s11293-020-09684-0
General Economics, Econometrics and Finance; South Africa; Remuneration pattern; Public sector earnings; Private sector earnings; Co-integration; Granger causality; Dutch disease
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Abstract:
This paper investigates the public-private remuneration patterns in South Africa with time-series methods for the first time since the introduction of an inflation-targeting framework in 2000. Co-integration tests and analysis confirm that there is a stable, long-run relationship between nominal and real remuneration in the public and private sector. The adjustment to the deviations from this long-run relationship is strong and significant for public-sector remuneration, while private-sector wages neither respond to deviations from the long-run relationship nor lagged changes in public-sector remuneration. The causal direction from private- to public-sector remuneration does not change if real earnings are calculated with the gross domestic product deflator. This is confirmed by simple Granger-causality tests.
