The Impact of Immigration on the Labour Market: Evidence from South Africa.

Topics: Africa, Human migration, Immigration Pages: 69 (22280 words) Published: March 22, 2011
The Impact of Immigration on the Labour Market: Evidence
from South Africa.
BY
OMAZULU SIBADA
A dissertation submitted in fulfillment of the requirements for the degree of Master of Commerce in Economics.
DEPARTMET OF ECOOMICS
FACULTY OF MAAGEMET AD COMMERCE
UIVERSITY OF FORT HARE
SUPERVISOR: PROFESSOR M CUBE
OVEMBER 2008
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DECLARATIO & COPYRIGHT
I, the undersigned Nomazulu Sibanda, hereby declare that this dissertation is my own original work and that it has not been presented at any other University for a similar or any other degree award.

……………………………………
Signature
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Date
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ACKOWEDGEMETS
The financial assistance of National Research Foundation (NRF) towards this research is hereby acknowledged. Opinions expressed and conclusions arrived at are those of the author and are not necessarily to be attributed to the funders. I also thank my supervisor Professor M. Ncube who showed unfailing confidence in my work. l would like to thank my friends for assisting and supporting me. My last gratitude goes to Miss Mbali Dube for her patience, support and confidence in me.

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DEDICATIOS
This dissertation is dedicated to Miss Mbali Dube for her outpouring love and support. v
Acronyms and Abbreviations
DTI - Department of Industry and Trade
GDP -Gross Domestic Product
ASGISA-Accelerated and Shared Growth Initiative for South Africa OLS- Ordinary Least Squares
SARB- South African Reserve Bank
ECT-Error Correction Term
ECM- Error Correction Model
DW-Durbin Watson
SE-Standard Error
ILO-International Labour Organisation
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Abstract
The impact of immigrants on the labour market in the South African context has always been a long standing issue with both government and natives’ fearing for the latter’s displacement effect, pressure on wages and resources. Migrants are blamed for poor labour market conditions of a host country. Literature reviewed from Africa and elsewhere shows that migrants have negative outcomes on the host country’s labour market. For this study an Error Correction Model on time series data from 1980-2006 has been estimated. The study estimated two models that is the unemployment and the wages models. The variables used for estimation are immigration, inflation and the Gross Domestic Product. The study surprisingly found a positive impact of immigrants on wages but the effect on employment was negative and significant. It is important to note here that the calculated impact is only for the documented immigrants the impact the illegal ones is not known.

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Table of Contents
CHAPTER 1........................................................................................................................ 1 1.1 Introduction ................................................................................................................... 1 1.2 Statement of the Problem.............................................................................................. 4 1.3 Objectives of the Study ................................................................................................. 5 1.4 Hypothesis of the Study ................................................................................................ 5 1.5 Significance of the Study .............................................................................................. 5 1.6 Organisation of the Study.............................................................................................. 6 CHAPTER 2........................................................................................................................ 7 An Overview of Immigration trends in South Africa ......................................................... 7 2 .1 Introduction .............................................................................................................. 7 2.2 Migration: A Historical Overview ............................................................................ 8 2.3 Structure and...


References: Adjustment Phase (as a Percentage of active Population). ............................................... 21
Table 2.3 Wage Dispersion and Real Wage Changes in Manufacturing (US$) (1975-1979
to 1987-1991) .................................................................................................................... 22
Table 2.4 Immigration by Skill ........................................................................................
to a period before colonization of Africa that is, 150 years ago (Crush, 1999). South Africa has
remained as one of the destinations of labour migrants since colonialism, drawing the largest
role in the development of many economies including South Africa (UNFPA, 2005).
According to the ILO, (2000) flows of undocumented immigrants into South Africa have
increased markedly in the post-apartheid era; their precise number is a matter of controversy,
(GDP) resides in South Africa. Historically, the mining and agricultural sectors in South Africa
were dependant on migrant labour from Southern Africa (Maharaj, 2004).
member. Chen et al (2003), view migration as an investment in which the income gain along
with other benefits resulting from migration must at least exceed the costs associated with it to
development of the labour exporting country (Davies and Head 1995). Sending countries also
benefit from reduced unemployment, accumulated savings, knowledge and skills transfer when
UNFPA (2005), notes that labour immigrants solve the problem of labour shortages in the
receiving country, as they fill the gaps created by emigration and inadequacy education and
workers (Dustman et al 2003). Migrants tend to rob natives of their employment opportunities,
thus displacing them in the labour market
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