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Wages Equal Productivity: Fact or Fiction?

Johannes Van Biesebroeck ()

No 10174, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Using a matched employer-employee data set of manufacturing plants in three sub-Saharan countries, I compare the marginal productivity of different categories of workers with the wages they earn. Under certain conditions, the wage premiums for worker characteristics should equal the productivity benefits associated with them. I find that equality holds strongly for the most developed country in the sample (Zimbabwe), but not at all for the least developed country (Tanzania). Differences between wage and productivity premiums are most pronounced for characteristics that are clearly related to human capital, such as schooling, training, experience, and tenure. Localized labor markets, imperfect substitutability of different worker-types, sampling errors, and nonlinear effects are rejected as explanation for the gap between wage and productivity effects.

JEL-codes: J31 J41 (search for similar items in EconPapers)
Date: 2003-12
Note: LS PR
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Published as Van Biesebroeck, Johannes, 2011. "Wages Equal Productivity. Fact or Fiction? Evidence from Sub Saharan Africa," World Development, Elsevier, vol. 39(8), pages 1333-1346, August.

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Journal Article: Wages Equal Productivity. Fact or Fiction? Evidence from Sub Saharan Africa (2011) Downloads
Working Paper: Wages Equal Productivity. Fact or Fiction? (2007) Downloads
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