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Labour Market Flexibility, Wages and Incomes in Sub‐Saharan Africa in the 1990s

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  • Geeta Kingdon
  • Justin Sandefur
  • Francis Teal

Abstract

This paper provides an overview of how African labor markets have performed in the 1990s. It is argued that the failure of African labor markets to create good paying jobs has resulted in excess labor supply in the form of either open unemployment or a growing self-employment sector. One explanation for this outcome is a lack of labor market `flexibility` keeping formal sector wages above their equilibrium level and restricting job creation. We identify three attributes of labor market flexibility. First whether real wages decline over time, secondly the tendency for wages to adjust in the face of unemployment, and thirdly the extent of wage differentials between sectors and/or firms of various size. Recent research shows that real wages in Africa during the 1990s may have been more downwardly flexible than previously thought and have been surprisingly responsive to unemployment rates, yet large wage differentials between formal and informal sector firms remain. This third sense of the term inflexibility can explain a common factor across diverse African economies - the high income divide between those working in large firms and those not. Those working in the thriving self-employment sector in Ghana have something in common with the unemployed in South Africa - both have very low income opportunities relative to those in large firms.

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Bibliographic Info

Article provided by African Development Bank in its journal African Development Review.

Volume (Year): 18 (2006)
Issue (Month): 3 ()
Pages: 392-427

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Handle: RePEc:adb:adbadr:928

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Citations

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Cited by:
  1. Justin Sandefur & Pieter Serneels, 2006. "African poverty through the lens of labor economics: Earnings & mobility in three countries," Economics Series Working Papers GPRG-WPS-060, University of Oxford, Department of Economics.
  2. Falco, Paolo & Kerr, Andrew & Rankin, Neil & Sandefur, Justin & Teal, Francis, 2011. "The returns to formality and informality in urban Africa," Labour Economics, Elsevier, vol. 18(S1), pages S23-S31.
  3. Francis Teal & Godius Kahyarara, 2008. "The returns to vocational training and academic education: Evidence from Tanzania," Economics Series Working Papers WPS/2008-07, University of Oxford, Department of Economics.
  4. Francis Teal & Godius Kahyarara, 2006. "To train or to educate? Evidence from Tanzania," Economics Series Working Papers GPRG-WPS-051, University of Oxford, Department of Economics.
  5. Shashidhara Kolavalli & Elizabeth Robinson & Guyslain Ngeleza & Felix Asante, 2012. "Economic Transformation in Ghana: Where Will the Path Lead?," Journal of African Development, African Finance and Economic Association, vol. 14(2), pages 41-78.
  6. Courtney Monk & Justin Sandefur & Francis Teal, 2008. "Does Doing an Apprenticeship Pay Off? Evidence from Ghana," CSAE Working Paper Series 2008-08, Centre for the Study of African Economies, University of Oxford.
  7. Godius Kahyarara & Francis Teal, 2008. "The returns to vocational training and academic education: Evidence from Tanzania," CSAE Working Paper Series 2008-07, Centre for the Study of African Economies, University of Oxford.
  8. Francis Teal & Justin Sandefur & Neil Rankin, 2010. "Learning; Earning in Africa: Where are the Returns to Education High?," Economics Series Working Papers CSAE WPS/2010-02, University of Oxford, Department of Economics.
  9. Francis Teal & Rosemary Atieno, 2006. "Gender, Education and Occupational Outcomes: Kenya`s Informal Sector in the 1990s," Economics Series Working Papers GPRG-WPS-050, University of Oxford, Department of Economics.
  10. Durevall, Dick, 2011. "East African Community: Pre-conditions for an Effective Monetary Union," Working Papers in Economics 520, University of Gothenburg, Department of Economics.
  11. Kim Lehrer & Monazza Aslam, 2012. "Learning by Doing: Skills and Jobs in Urban Ghana," Economics Series Working Papers WPS/2012-15, University of Oxford, Department of Economics.
  12. Haywood, Luke & Falco, Paolo, 2013. "Entrepreneurship versus Joblessness - Explaining the Rise in Self-Employment," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80016, Verein für Socialpolitik / German Economic Association.
  13. Freeman, Richard B., 2010. "Labor Regulations, Unions, and Social Protection in Developing Countries," Handbook of Development Economics, Elsevier.
  14. Francis Teal & Nicholas Nsowah-Nuamah and Moses Awoonor-Williams, 2010. "Jobs, Skills and Incomes in Ghana: How was poverty halved?," Economics Series Working Papers CSAE WPS/2010-01, University of Oxford, Department of Economics.
  15. Francis Teal, 2010. "Higher Education and Economic Development in Africa: a Review of Channels and Interactions," Economics Series Working Papers CSAE WPS/2010-25, University of Oxford, Department of Economics.
  16. repec:ldr:wpaper:92 is not listed on IDEAS
  17. Francis Teal, 2010. "Higher Education and Economic Development in Africa: a Review of Channels and Interactions," CSAE Working Paper Series 2010-25, Centre for the Study of African Economies, University of Oxford.

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