Do Large Employers Pay More? The Case Of Five Developing African Countries

Using comparable data sets for five African countries, we evaluate possible explanations for the employer-size wage effect across these countries. Our results indicate that, apart from observable worker characteristics, most theories cannot explain very much of the wage premium received in larger firms. Moreover, we find that the employer-size wage effect does not differ greatly across the five African countries. As is the case with other developing nations, however, the effect is larger than that found in the industrialised world, though unlike the industrialised world it is larger for white collar workers than for blue collar workers. Data for one of the African countries, in conjunction with other evidence, suggest that this may in part be the result of skill-biased technology having a greater effect on the firm¡¯s size-wage distribution across skill groups in developing countries.