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

Type Thesis or Dissertation - Master in Economics
Title The men by the side of the road: determinants of the wages of day labourers
Publication (Day/Month/Year) 2015
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.

Related studies