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Wages and Labor Management in African Manufacturing

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  • Marcel Fafchamps
  • MÃ¥ns Söderbom

Abstract

Using matched employer-employee data on 10 African countries, this paper examines the relationship beween wages, worker supervision, and labor productivity in manufacturing. Wages increase with firm size for both production workers and supervisors. We develop a two-tier model of supervision that can account for this stylized fact and we fit the structural model to the data. Employee data is used to derive a firm-specific wage premium that is purged of the effect of worker observables. We find a strong effect of both supervision and wages on effort and hence on labor productivity. Labor management in sub-Saharan Africa appears problematic, with much higher supervisor-to-worker ratios than in Morocco and a higher elasticity of effort with respect to supervision.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2004-02.

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Date of creation: 01 Feb 2004
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Handle: RePEc:oxf:wpaper:wps/2004-02

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  1. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier.
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Citations

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Cited by:
  1. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
  2. Perroni, Carlo & Proto, Eugenio, 2007. "Moral Hazard and Entrepreneurial Failure in a Two-sector Model of Productive Matching - with an Application to the Natural Resource Curse," The Warwick Economics Research Paper Series (TWERPS) 796, University of Warwick, Department of Economics.
  3. Benhassine, Najy & Fafchamps, Marcel & Söderbom, Måns, 2006. "Wage Gaps and Job Sorting in African Manufacturing," CEPR Discussion Papers 6003, C.E.P.R. Discussion Papers.
  4. Paul Beaudry & Patrick Francois, 2010. "Managerial Skills Acquisition and the Theory of Economic Development," Review of Economic Studies, Oxford University Press, vol. 77(1), pages 90-126.
  5. Arjun Jayadev & Samuel Bowles, 2004. "Guard Labor: An Essay in Honor of Pranab Bardhan," Working Papers wp90, Political Economy Research Institute, University of Massachusetts at Amherst.
  6. Christophe Muller & Christophe Nordman, 2005. "Wage And Human Capital In Exporting Firms In Morocco," Working Papers. Serie AD 2005-14, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  7. Christophe Muller, Christophe Nordman, 2008. "Task Organization, Human Capital and Wages in Moroccan Exporting Firms," THEMA Working Papers 2008-39, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  8. Tetsushi Sonobe & John Akoten & Keijiro Otsuka, 2011. "The growth process of informal enterprises in Sub-Saharan Africa: a case study of a metalworking cluster in Nairobi," Small Business Economics, Springer, vol. 36(3), pages 323-335, April.
  9. Jellal, Mohamed, 2014. "Firmes industrielles incitations et formation approche théorique
    [Industrial firms incentives and training Policy theoretical approach]
    ," MPRA Paper 57306, University Library of Munich, Germany.
  10. Jellal, Mohamed, 2012. "Maroc salaire minimum emploi et pauvreté
    [Morocco minimum wage employment and poverty]
    ," MPRA Paper 38491, University Library of Munich, Germany.
  11. Marcel Fafchamps & Eleni Gabre-Madhin, 2007. "Agricultural Markets in Benin and Malawi," Economics Series Working Papers GPRG-WPS-068, University of Oxford, Department of Economics.
  12. Marcel Fafchamps, 2007. "Human Capital, Exports, and Wages," Economics Series Working Papers GPRG-WPS-069, University of Oxford, Department of Economics.
  13. Guiying (Laura) Wu, 2013. "Investment Frictions and the Aggregate Output Loss in China," Economic Growth centre Working Paper Series 1307, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre.
  14. Fox, Louise & Oviedo, Ana Maria, 2008. "Are skills rewarded in Sub-Saharan Africa ? determinants of wages and productivity in the manufacturing sector," Policy Research Working Paper Series 4688, The World Bank.

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