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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:Do Workers in Africa Get a Wage Premium if Employed in Firms Owned by Foreigners?
Author:te Velde, Dirk W.
Year:2003
Periodical:Journal of African Economies
Volume:12
Issue:1
Period:March
Pages:41-73
Language:English
Geographic terms:Subsaharan Africa
Africa
Subjects:wage differentials
industry
foreign enterprises
Labor and Employment
Economics and Trade
Link:http://jae.oxfordjournals.org/content/12/1/41.full.pdf
Abstract:Do firms owned by foreigners pay higher wages than locally owned firms for apparently equivalent workers? Do such benefits accrue to all or only certain types of workers? This paper uses data on individual wages in manufacturing industry for five African countries - Cameroon, Ghana, Kenya, Zambia and Zimbabwe - in the early 1990s to address these questions. It presents two main findings. First, foreign ownership is associated with a 20-40 percent increase in individual wages (conditional on age, tenure and education) on average. This is halved to 8-23 percent if the fact that foreign-owned firms are larger and locate in high-wage sectors and regions is taken into account. Second, there is a tendency in some countries for more skilled workers (using occupation and education categories) to benefit more from foreign ownership than less skilled workers and this conclusion holds after accounting for the size distribution of foreign firms. The paper discusses, but cannot directly test, the plausibility of two explanations for these findings: 1) foreign-owned firms employ technologies that are more skill-biased than technologies in local firms and 2) skilled workers in foreign firms are more effective in rent sharing than other workers. The paper contends that these explanations may not be mutually exclusive and, hence, cannot be empirically distinguished. App., bibliogr., notes, ref., sum. [Journal abstract]
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