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

  • Strobl, Eric

    ()

    (Ecole Polytechnique, Paris)

  • Thornton, Robert

    ()

    (Lehigh University)

Using comparable data sets for five African countries we estimate, and evaluate possible explanations for, the employer size wage effect across these. Our results indicate, just as has been generally found for other developing and developed nations, that apart from observable worker characteristics most potential 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. Like other developing nations it is, however, larger than that found in the industrialised world, and, unlike the industrialised world, larger for white than blue collar workers. Additionally, data for one of the African countries in conjunction with other tentative evidence suggests that this may in part be because skill biased technology affects the firm size wage distribution across skill groups in developing countries more.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 660.

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Length: 47 pages
Date of creation: Dec 2002
Date of revision:
Handle: RePEc:iza:izadps:dp660
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  1. Doms, Mark & Dunne, Timothy & Troske, Kenneth R, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 253-90, February.
  2. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  3. Charles Brown & James L. Medoff, 1989. "The Employer Size-Wage Effect," NBER Working Papers 2870, National Bureau of Economic Research, Inc.
  4. Evans, David S. & Leighton, Linda S., 1987. "Why do Smaller Firms Pay Less?," Working Papers 87-19, C.V. Starr Center for Applied Economics, New York University.
  5. Rudolf Winter-Ebmer & Josef Zweimueller, . "Firm Size Wage Differentials in Switzerland: Evidence from Job Changers," IEW - Working Papers 001, Institute for Empirical Research in Economics - University of Zurich.
  6. Mazumdar, Dipak, 1976. "The Rural-Urban Wage Gap, Migration, and the Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 28(3), pages 406-25, November.
  7. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May.
  8. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
  9. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  10. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
  11. 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.
  12. Barron, John M & Black, Dan A & Loewenstein, Mark A, 1987. "Employer Size: The Implications for Search, Training, Capital Investment, Starting Wages, and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 76-89, January.
  13. Steve J. Davis & John Haltiwanger, 1991. "Wage Dispersion Between and Within U.S. Manufacturing Plants, 1963-1986," NBER Working Papers 3722, National Bureau of Economic Research, Inc.
  14. Albaek, Karsten & Arai, Mahmood & Asplund, Rita & Barth, Erling & Strojer Madsen, Erik, 1998. "Measuring wage effects of plant size," Labour Economics, Elsevier, vol. 5(4), pages 425-448, December.
  15. Tan, Hong & Batra, Geeta, 1997. "Technology and Firm Size-Wage Differentials in Colombia, Mexico, and Taiwan (China)," World Bank Economic Review, World Bank Group, vol. 11(1), pages 59-83, January.
  16. Miguel Marcelle & Eric Strobl, 2003. "Do Smaller Firms Pay Less in the Caribbean? The Case of Trinidad and Tobago," Journal of Development Studies, Taylor & Francis Journals, vol. 39(5), pages 181-198.
  17. Kremer, Michael, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 551-75, August.
  18. Schmidt, Christoph M & Zimmermann, Klaus F, 1991. "Work Characteristics, Firm Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 705-10, November.
  19. Schaffner, Julie Anderson, 1998. "Premiums to employment in larger establishments: evidence from Peru," Journal of Development Economics, Elsevier, vol. 55(1), pages 81-113, February.
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