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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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  • Van Biesebroeck, Johannes, 2011. "Wages Equal Productivity. Fact or Fiction? Evidence from Sub Saharan Africa," World Development, Elsevier, vol. 39(8), pages 1333-1346, August.
  • Handle: RePEc:eee:wdevel:v:39:y:2011:i:8:p:1333-1346
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    9. 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.
    10. Stephan Kampelmann & François Rycx & Yves Saks & Ilan Tojerow, 2018. "Does education raise productivity and wages equally? The moderating role of age and gender," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-37, December.
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    14. Vincent Vandenberghe, 2017. "The Contribution of Educated Workers to Firms' Efficiency Gains The Key Role of the Proximity to Frontier," LIDAM Discussion Papers IRES 2017012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    15. Van Biesebroeck, Johannes, 2011. "Wages Equal Productivity. Fact or Fiction? Evidence from Sub Saharan Africa," World Development, Elsevier, vol. 39(8), pages 1333-1346, August.
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    18. Marinko Škare & Damian Škare, 2017. "Is the great decoupling real?," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(3), pages 451-467, May.
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    20. Figal Garone, Lucas & López Villalba, Paula A. & Maffioli, Alessandro & Ruzzier, Christian A., 2020. "Firm-level productivity in Latin America and the Caribbean," Research in Economics, Elsevier, vol. 74(2), pages 186-192.
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    More about this item

    Keywords

    sub-Saharan Africa; human capital; wage; labor market;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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