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Wages Equal Productivity. Fact or Fiction? Evidence from Sub Saharan Africa

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  • Van Biesebroeck, Johannes

Abstract

Summary If labor markets operate with only minor frictions, productivity premiums associated with worker characteristics should equal the corresponding wage premiums. We evaluate this for labor market experience, schooling, job tenure, and training using matched employer-employee data from the manufacturing sector of three sub-Saharan countries. Equality holds remarkably well in Zimbabwe (the most developed country in the sample), but not at all in Tanzania (the least developed), while results are intermediate in Kenya. Where equality fails, the pattern is for more general human capital characteristics (such as experience) to receive a wage return that exceeds productivity, while the reverse applies to more firm-specific characteristics (such as tenure). Localized labor markets and imperfect substitutability of worker-types provide a partial explanation.

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Bibliographic Info

Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 8 (August)
Pages: 1333-1346

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:8:p:1333-1346

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Keywords: sub-Saharan Africa; human capital; wage; labor market;

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Cited by:
  1. Konings, Jozef & Vanormelingen, Stijn, 2010. "The Impact of Training on Productivity and Wages: Firm Level Evidence," IZA Discussion Papers 4731, Institute for the Study of Labor (IZA).
  2. Johannes Van Biesebroeck, 2003. "Wages Equal Productivity: Fact or Fiction?," NBER Working Papers 10174, National Bureau of Economic Research, Inc.
  3. Johannes Van Biesebroeck, 2007. "Wage and Productivity Premiums in Sub-Saharan Africa," NBER Working Papers 13306, National Bureau of Economic Research, Inc.
  4. Lovász, Anna & Rigó, Mariann, 2013. "Vintage effects, aging and productivity," Labour Economics, Elsevier, vol. 22(C), pages 47-60.
  5. Navon, Guy, 2009. "Human Capital Spillovers in the Workplace: Labor Diversity and Productivity," MPRA Paper 17741, University Library of Munich, Germany.
  6. Angel-Urdinola, Diego F. & Haimovich, Francisco & Robayo, Monica, 2009. "Is Social Assistance Contributing to Higher Informality in Turkey?," MPRA Paper 27675, University Library of Munich, Germany.

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