IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp660.html
   My bibliography  Save this paper

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

Author

Listed:
  • Strobl, Eric

    () (Aix-Marseille University)

  • Thornton, Robert

    () (Lehigh University)

Abstract

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.

Suggested Citation

  • Strobl, Eric & Thornton, Robert, 2002. "Do Large Employers Pay More in Developing Countries? The Case of Five African Countries," IZA Discussion Papers 660, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp660
    as

    Download full text from publisher

    File URL: http://ftp.iza.org/dp660.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. 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.
    2. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    3. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
    4. 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.
    5. 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.
    6. repec:hoo:wpaper:e-95-7 is not listed on IDEAS
    7. 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.
    8. Joseph E. Stiglitz, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC's: The Labor Turnover Model," The Quarterly Journal of Economics, Oxford University Press, vol. 88(2), pages 194-227.
    9. Josef Zweimuller & Rudolf Winter-Ebmer, 1999. "Firm-Size Wage Differentials in Switzerland: Evidence from Job-Changers," American Economic Review, American Economic Association, vol. 89(2), pages 89-93, May.
    10. Mark Doms & Timothy Dunne & Kenneth R. Troske, 1997. "Workers, Wages, and Technology," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 253-290.
    11. 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 705-710, November.
    12. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-1059, October.
    13. David S. Evans & Linda S. Leighton, 1989. "Why Do Smaller Firms Pay Less?," Journal of Human Resources, University of Wisconsin Press, vol. 24(2), pages 299-318.
    14. 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.
    15. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    16. 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.
    17. 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.
    18. Mazumdar, Dipak, 1976. "The Rural-Urban Wage Gap, Migration, and the Shadow Wage," Oxford Economic Papers, Oxford University Press, vol. 28(3), pages 406-425, November.
    19. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
    20. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huu Chi Nguyen & Christophe J. Nordman & François Roubaud, 2013. "Who Suffers the Penalty?: A Panel Data Analysis of Earnings Gaps in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1694-1710, December.
    2. Marcel Fafchampsm & Måns Söderbom, 2006. "Wages and Labor Management in African Manufacturing," Journal of Human Resources, University of Wisconsin Press, vol. 41(2).
    3. repec:dau:papers:123456789/10601 is not listed on IDEAS
    4. Måns Söderbom & Francis Teal & Anthony Wambugu, 2002. "Does firm size really affect earnings?," CSAE Working Paper Series 2002-08, Centre for the Study of African Economies, University of Oxford.
    5. Holger Görg & Eric Strobl & Frank Walsh, 2016. "Why Do Foreign-Owned Firms Pay More? The Role of On-the-Job Training," World Scientific Book Chapters,in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 3, pages 33-51 World Scientific Publishing Co. Pte. Ltd..
    6. Nordman, Christophe J. & Rakotomanana, Faly & Roubaud, François, 2016. "Informal versus Formal: A Panel Data Analysis of Earnings Gaps in Madagascar," World Development, Elsevier, vol. 86(C), pages 1-17.
    7. te Velde, Dirk Willem & Morrissey, Oliver, 2003. "Spatial Inequality for Manufacturing Wages in Five African Countries," WIDER Working Paper Series 066, World Institute for Development Economic Research (UNU-WIDER).
    8. Soderbom, Mans & Teal, Francis, 2004. "Size and efficiency in African manufacturing firms: evidence from firm-level panel data," Journal of Development Economics, Elsevier, vol. 73(1), pages 369-394, February.
    9. Chris Milner & Verena Tandrayen, 2007. "The Impact of Exporting and Export Destination on Manufacturing Wages: Evidence for Sub-Saharan Africa," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 13-30, February.
    10. Abigail Barr & Pieter Serneels, 2004. "Wages and Reciprocity in the Workplace," CSAE Working Paper Series 2004-18, Centre for the Study of African Economies, University of Oxford.
    11. Cai, Hongbin & Wang, Miaojun & Yan, Se, 2014. "Why Do Large Firms Willingly Pay High Wages in Developing Countries?," MPRA Paper 53538, University Library of Munich, Germany.

    More about this item

    Keywords

    Zimbabwe; Ghana; Cameroon; employer size wage effect; Kenya; Zambia;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp660. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak). General contact details of provider: http://www.iza.org .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.