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Real Wages and Returns to Human Capital in Kenya Manufacturing firms

  • Wambugu, Anthony

    (Department of Economics, School of Economics and Commercial Law, Göteborg University)

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    This paper studies how real wages and wage returns to human capital in Kenya manufacturing firms changed, using cross-section data sets from a survey conducted in 1993, 1994, 1995, and 2000. A quantile regression technique is used to examine how the impact of human capital varies across the conditional wage distribution. The study found that between 1993 and 2000, the real wage, standardized for observable human capital characteristics increased, while returns to education appear to have been stable. Returns to education are highest for workers educated to advanced levels of education at all quartiles. Moreover, workers at the extreme top of the wage distribution have the highest returns to education while workers at the extreme bottom of the wage distribution have the lowest returns to education. This suggests that at each level of education, unmeasured factors compliment schooling in wage determination. Other dimensions of human capital such as tenure in current firm and worker’s age are also significantly correlated with wages.

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    File URL: http://hdl.handle.net/2077/2769
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    Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 75.

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    Length: 30 pages
    Date of creation: 20 Jun 2002
    Date of revision:
    Handle: RePEc:hhs:gunwpe:0075
    Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
    Phone: 031-773 10 00
    Web page: http://www.handels.gu.se/econ/

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    1. Ritva Reinikka & Paul Collier, 2001. "Uganda's Recovery : The Role of Farms, Firms, and Government," World Bank Publications, The World Bank, number 13850.
    2. Simon Appleton & Arsene Balihuta, 1996. "Education and agricultural productivity: Evidence from Uganda," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(3), pages 415-444.
    3. Temple, Jonathan R. W., 2001. "Generalizations that aren't? Evidence on education and growth," European Economic Review, Elsevier, vol. 45(4-6), pages 905-918, May.
    4. Bennell, Paul, 1996. "Rates of return to education: Does the conventional pattern prevail in sub-Saharan Africa?," World Development, Elsevier, vol. 24(1), pages 183-199, January.
    5. Måns Söderbom & Francis Teal, 2001. "Firm size and human capital as determinants of productivity and earnings," CSAE Working Paper Series 2001-09, Centre for the Study of African Economies, University of Oxford.
    6. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-40, August.
    7. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September.
    8. Damiano Kulundu Manda & Arne Bigsten & Germano Mwabu, 2005. "Trade union membership and earnings in Kenyan manufacturing firms," Applied Economics, Taylor & Francis Journals, vol. 37(15), pages 1693-1704.
    9. Behrman, Jere R & Birdsall, Nancy, 1983. "The Quality of Schooling: Quantity Alone is Misleading," American Economic Review, American Economic Association, vol. 73(5), pages 928-46, December.
    10. Sharada Weir & John Knight, 2000. "Education externalities in rural Ethiopia: evidence from average and stochastic frontier production functions," CSAE Working Paper Series 2000-04, Centre for the Study of African Economies, University of Oxford.
    11. Simon Appleton & John Hoddinott & John MacKinnon, 1996. "Education and health in sub-Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 8(3), pages 307-339.
    12. Colm Harmon & Hessel Oosterbeek, 2000. "The Returns to Education: A Review of Evidence, Issues and Deficiencies in the Literature," CEE Discussion Papers 0005, Centre for the Economics of Education, LSE.
    13. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    14. Willis, Robert J., 1987. "Wage determinants: A survey and reinterpretation of human capital earnings functions," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 10, pages 525-602 Elsevier.
    15. Pritchett, Lant, 1996. "Where has all the education gone?," Policy Research Working Paper Series 1581, The World Bank.
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