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Do Wages reflect Productivity?

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  • Pieter Serneels

Abstract

We investigate wage and productivity profiles in the Ghanaian Manufacturing sector using matched firm and worker data. Following Medoff and Abraham (1980, 1981), we use performance appraisal as our measure of individual productivity. Controlling for a wide range of human capital variables, including cognitive skills, we find that on average wage profiles do reflect productivity profiles. However, wages are steeper in large and unionized firms. This suggests that human capital theory holds for small and non-unionized firms, but that not hold for large and unionized companies.

Suggested Citation

  • Pieter Serneels, 2005. "Do Wages reflect Productivity?," Economics Series Working Papers GPRG-WPS-029, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:gprg-wps-029
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    References listed on IDEAS

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    More about this item

    Keywords

    Wage Profile; Individual Productivity; Performance Appraisal;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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