The men by the side of the road : determinants of the wages of day labourers / Ilandi Bezuidenhout

• Main Author: Bezuidenhout, Ilandi
• Language: en
• Published: 2015
• Subjects: South Africa; Day labourers; Wage determinants; Human Capital Theory
• Online Access: http://hdl.handle.net/10394/14239

South Africa faces significant challenges with low economic growth and high unemployment rates. Unemployed individuals find it difficult to enter into the informal and formal sectors and are often required to work as day labourers. The purpose of this study is to investigate whether the human capital theory can provide an explanation for the determinants of wages of day labourers. A focus was placed on the relationships between wages and education, wages and training, wages and skills, and wages and experience. Using cross-sectional data from a survey conducted in 2007/2008, a regression analysis of these relationships was performed. The results showed that earnings increase with an increase in educational level. Day labourers who completed primary and secondary schooling earn more than day labourers who have had no schooling. The day labourers who completed a post-school qualification realised the highest returns in wages. A small percentage of day labourers indicated that they completed a form of training. A pattern was evident of day labourers with higher levels of education engaging in training that is associated with scarce work that requires higher levels of skills and that is more likely to pay higher wages. Work in the skilled cluster was found to be positively and significantly associated with wages. Day labourers who are able to do a variety of jobs are also likely to earn higher earnings. Experience was represented by the number of years an individual has worked as a day labourer and was found to be negatively associated with wages. The findings of this paper confirm that most of the human capital theory can be applied to explain the wages of day labourers in South Africa. === MCom (Economics), North-West University, Potchefstroom Campus, 2015