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Are wages and productivity in Zimbabwe affected by human capital investment and international trade?

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  • Verner, Dorte

Abstract

To analyze what determines wages and productivity in Zimbabwe, the author analyzes an employer/employee data-set from Zimbabwe's manufacturing sector. The author finds that: * Formal education, training, and experience positively affect wages and productivity positively. * Women are paid roughly 37 percent less than men although they are not measurably less productive. * There is no strong indication of ethnic discrimination among employees, but Europeans are being paid more in larger firms, although they are marginally less productive than workers of African origin. * The wage premium for workers who completed secondary school does not necessarily reflectgreater productivity but may indicate a shortage of educated workers. * Workers trained in-house earn more although in-house training does not instantly affect productivity. Training by outside trainers does improve productivity but is not rewarded with higher wages. * Apprentices are paid more than non-apprentices. Perhaps an apprentice diploma serves as a screening device, when hiring. * Temporary workers are more productive than permanent workers, perhaps hoping to get a permanent contract. * Union members earn less than non-union members despite being more productive. Perhaps union members fight more to have skills upgraded than for wage increases. * Larger exporting firms are marginally less productive and pay marginally less than the average firm, but ar more productive than smaller firms (and their wages match productivity). Workers in larger woods and metals are paid less than workers in smaller firms, although they are not less productive. * Exporting firms benefit more than employees do from trade openness and greater productivity. * Foreign-owned firms are more productive than other firms (perhaps because of new technology). * Firms that employ more expatriates tend to pay more. The more expatriates there are in metals firms, the more productive the employees are, perhaps because the expatriates bring knowledge about new technology to the enterprise. * Employees in the metal and textile sectors are paid more than those in the food sector, but employees in metals are less productive than employees from other sectors.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2101.

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Date of creation: 30 Apr 1999
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Handle: RePEc:wbk:wbrwps:2101

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Keywords: Environmental Economics&Policies; Labor Policies; Economic Theory&Research; Banks&Banking Reform; Municipal Financial Management; Economic Theory&Research; Banks&Banking Reform; Municipal Financial Management; Health Monitoring&Evaluation; Environmental Economics&Policies;

References

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  1. Velenchik, Ann D., 1997. "Market power, firm performance and real wage growth in Zimbabwean manufacturing," World Development, Elsevier, vol. 25(5), pages 749-762, May.
  2. Booth, Alison L & Chatterji, Monojit, 1997. "Training and Unions," CEPR Discussion Papers 1573, C.E.P.R. Discussion Papers.
  3. Velenchik, Ann D., 1997. "Government intervention, efficiency wages, and the employer size wage effect in Zimbabwe," Journal of Development Economics, Elsevier, vol. 53(2), pages 305-338, August.
  4. Erica L. Groshen, 1991. "The Structure of the Female/Male Wage Differential: Is It Who You Are, What You Do, or Where You Work?," Journal of Human Resources, University of Wisconsin Press, vol. 26(3), pages 457-472.
  5. John B. Knight, 1997. "Labour market policies and outcomes in Zimbabwe," CSAE Working Paper Series 1997-01, Centre for the Study of African Economies, University of Oxford.
  6. Steel, William F & Webster, Leila M, 1992. "How Small Enterprises in Ghana Have Responded to Adjustment," World Bank Economic Review, World Bank Group, vol. 6(3), pages 423-38, September.
  7. Barro, R.J., 1989. "Economic Growth In A Cross Section Of Countries," RCER Working Papers 201, University of Rochester - Center for Economic Research (RCER).
  8. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  9. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-46, July.
  10. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, June.
  11. Biggs, T. & Shah, M. & Srivastava, P., 1995. "Technological Capabilities and Learning in African Enterprises," Papers 288, World Bank - Technical Papers.
  12. Adams, Jennifer M., 1991. "Female wage labor in rural Zimbabwe," World Development, Elsevier, vol. 19(2-3), pages 163-177.
  13. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  14. Peter R. Fallon & Robert E. B. Lucas, 1989. "Job Security Regulations and the Dynamic Demand for Industrial Labor in India and Zimbabwe," Boston University - Institute for Economic Development 2, Boston University, Institute for Economic Development.
  15. Pack, Howard, 1993. "Productivity and industrial development in sub-Saharan Africa," World Development, Elsevier, vol. 21(1), pages 1-16, January.
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Citations

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Cited by:
  1. Verner, Dorte, 1999. "Wage and productivity gaps - evidence from Ghana," Policy Research Working Paper Series 2168, The World Bank.
  2. Nicolai Kristensen & Dorte Verner, 2008. "Labor Market Distortions in Côte d'Ivoire: Analyses of Employer‐Employee Data from the Manufacturing Sector," African Development Review, African Development Bank, vol. 20(3), pages 343-377.
  3. Lopez-Acevedo, Gladys & Tinajero, Monica & Rubio, Marcela, 2005. "Mexico : human capital effects on wages and productivity," Policy Research Working Paper Series 3791, The World Bank.
  4. Lopez-Acevedo, Gladys, 2003. "Wages and productivity in Mexican manufacturing," Policy Research Working Paper Series 2964, The World Bank.
  5. Beatriz Muriel, 2011. "Rethinking Earnings Determinants in the Urban Areas of Bolivia," Development Research Working Paper Series 06/2011, Institute for Advanced Development Studies.
  6. Richard K. Johanson & Arvil V. Adams, 2004. "Skills Development in Sub-Saharan Africa," World Bank Publications, The World Bank, number 15028.
  7. Verner, Dorte, 2005. "Wage determination in Northeast Brazil," Policy Research Working Paper Series 3548, The World Bank.

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