We use data from the 1993 Project for Statistics on Living Standards and
Development to estimate the union wage premium of black workers in South Africa.
Unionised black males (females) earn 26 (81) per cent higher monthly wages than
those who are not unionized. For hourly wages, the union premium increases to 65
(127) per cent for males (females). Controlling for a worker’s characteristics and
assuming exogenous union membership and no sample selection, the hourly wage
union premium equals 38 (19) percent for males (females). We then estimate a
bivariate probit to investigate labour market participation and union membership
decisions, and use those results to account for samples selections when estimating
a Mincerian wage equation. The wage gain of a representative non-unionised worker
who joins a union equals 123 (96) per cent for males (females). Using bootstrapping
we construct the confidence intervals for those estimates and conclude that male
and female union wage premiums are not statistically different. However, our results
indicate that the South African union wage premium have been underestimated in
the literature. A union wage premium in the neighbourhood of 100 per cent confirms
that the South African labour market is highly segmented.