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Wage and productivity gaps - evidence from Ghana

  • Verner, Dorte

The author uses a unique data set (combining information about individual workers with information about the firms employing them) to jointly estimate production functions and wage equations. This approach allows her not only to assess the marginal impact on wages of demographic and other characteristics but also to compare how these variables affect productivity among various groups of workers. Among her findings: 1) Female employees are paid less than male employees, but this negative wage premium does not reflect commensurately lower productivity. 2) Employees'experience is reflected equally in wages and in productivity differentials over the worker's life cycle. Wages and productivity both increase, but at a decreasing rate. 3) The more training and education workers have, the higher their wages and the greater their productivity. 4) Productivity differences can be demonstrated for five levels of education completed. The productivity gap is greater than the wage gap. 5) Returns to education are similar across gender, sector, and level of unionization, but they are lower for unskilled workers than for skilled workers. 6) Training supplied by outside providers (as opposed to in-house training) is associated with higher wages but appears to have no (immediate) impact on productivity. 7) Trade union members'wages are in line with productivity. Both wages and productivity are higher for union members than for non-union members.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2168.

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Date of creation: 31 Aug 1999
Date of revision:
Handle: RePEc:wbk:wbrwps:2168
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  1. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  2. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-46, July.
  3. Teal, Francis, 1996. "The Size and sources of economic rents in a developing country manufacturing labour market," Economic Journal, Royal Economic Society, vol. 106(437), pages 963-76, July.
  4. Barro, Robert J, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 407-43, May.
  5. Patricia Jones, 1994. "Are manufacturing workers really worth their pay?," Economics Series Working Papers WPS/1994-12, University of Oxford, Department of Economics.
  6. Velenchik, Ann D, 1995. "Apprenticeship Contracts, Small Enterprises, and Credit Markets in Ghana," World Bank Economic Review, World Bank Group, vol. 9(3), pages 451-75, September.
  7. Booth, Alison L & Chatterji, Monojit, 1997. "Training and Unions," CEPR Discussion Papers 1573, C.E.P.R. Discussion Papers.
  8. Verner, Dorte, 1999. "Are wages and productivity in Zimbabwe affected by human capital investment and international trade?," Policy Research Working Paper Series 2101, The World Bank.
  9. Jacob Mincer & Solomon Polacheck, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 397-431 National Bureau of Economic Research, Inc.
  10. Acemoglu, Daron & Pischke, Jörn-Steffen, 1996. "Why do Firms Train? Theory and Evidence," CEPR Discussion Papers 1460, C.E.P.R. Discussion Papers.
  11. repec:oup:qjecon:v:107:y:1992:i:2:p:407-37 is not listed on IDEAS
  12. Erica L. Groshen, 1988. "Why do wages vary among employers?," Economic Review, Federal Reserve Bank of Cleveland, issue Q I, pages 19-38.
  13. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 407-37, May.
  14. Blau Francine D & Kahn Lawrence M, 2007. "The Gender Pay Gap," The Economists' Voice, De Gruyter, vol. 4(4), pages 1-6, June.
  15. Francis Teal, 1995. "Real wages and the demand for labour in Ghana's manufacturing sector," CSAE Working Paper Series 1995-07, Centre for the Study of African Economies, University of Oxford.
  16. Glewwe, Paul, 1996. "The relevance of standard estimates of rates of return to schooling for education policy: A critical assessment," Journal of Development Economics, Elsevier, vol. 51(2), pages 267-290, December.
  17. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  18. Patricia Jones, 1994. "Are manufacturing workers really worth their pay?," CSAE Working Paper Series 1994-12, Centre for the Study of African Economies, University of Oxford.
  19. repec:oup:qjecon:v:106:y:1991:i:2:p:407-43 is not listed on IDEAS
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