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Wage and productivity gaps - evidence from Ghana

Author

Listed:
  • Verner, Dorte

Abstract

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.

Suggested Citation

  • Verner, Dorte, 1999. "Wage and productivity gaps - evidence from Ghana," Policy Research Working Paper Series 2168, The World Bank.
  • Handle: RePEc:wbk:wbrwps:2168
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    References listed on IDEAS

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    7. Velenchik, Ann D, 1995. "Apprenticeship Contracts, Small Enterprises, and Credit Markets in Ghana," World Bank Economic Review, World Bank Group, vol. 9(3), pages 451-475, September.
    8. 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 963-976, July.
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    10. 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 409-446, July.
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    16. 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.
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    Citations

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    Cited by:

    1. Beatriz Muriel, 2011. "Rethinking Earnings Determinants in the Urban Areas of Bolivia," Development Research Working Paper Series 06/2011, Institute for Advanced Development Studies.
    2. Verner, Dorte, 2005. "Wage determination in Northeast Brazil," Policy Research Working Paper Series 3548, The World Bank.
    3. Markusen, James R. & Trofimenko, Natalia, 2009. "Teaching locals new tricks: Foreign experts as a channel of knowledge transfers," Journal of Development Economics, Elsevier, vol. 88(1), pages 120-131, January.
    4. Elizabeth M. Caucutt & Krishna B. Kumar, 2003. "Education Policies to Revive a Stagnant Economy: The Case of Sub- Saharan Africa," Development and Comp Systems 0304002, EconWPA.
    5. Fox, Louise & Oviedo, Ana Maria, 2008. "Are skills rewarded in Sub-Saharan Africa ? determinants of wages and productivity in the manufacturing sector," Policy Research Working Paper Series 4688, The World Bank.
    6. Nicolai Kristensen & Dorte Verner, 2008. "Labor Market Distortions in Côte d'Ivoire: Analyses of Employer‐Employee Data from the Manufacturing Sector," African Development Review, African Development Bank, vol. 20(3), pages 343-377.
    7. John J Matovu & Era Dabla-Norris, 2002. "Composition of Government Expenditures and Demand for Education in Developing Countries," IMF Working Papers 02/78, International Monetary Fund.

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