Fafchamps, Marcel, and Måns Söderbom. 2006. “Wages and Labor Management in African Manufacturing.” Journal of Human Resources 41(2): 346–379.
Using matched employer-employee data from ten African countries, we examine the relationship between wages, worker supervision, and labor productivity in manufacturing. Wages increase with firm size for both production workers and supervisors. We develop a two-tier model of supervision that can account for this stylized fact and we fit the structural model to the data. We find a strong effect of both supervision and wages on effort and hence on labor productivity. Labor management in sub-Saharan Africa appears problematic, with much higher supervisor-to-worker ratios than elsewhere and a higher elasticity of effort with respect to supervision than in Morocco.
Marcel Fafchamps is a reader in the department of economics, University of Oxford, UK, and a professorial fellow at Mansfield College, Oxford. He is also a deputy director of the Centre for the Study of African Economies (CSAE), Oxford. Måns Söderbom is a Leverhulme Early Career Research Fellow in the Department of Economics, University of Oxford, UK, and a Research Officer at the CSAE. The authors thank two anonymous referees, Takashi Kurosaki, Pramila Krishnan, Jim Malcolmson, David Newbery, Stephen Smith, Francis Teal, seminar participants at New York University, Northwestern University, University of Cambridge, University of Michigan, and University of Oxford, and participants at the 2002 NEUDC conference for useful comments on earlier drafts of the paper. The authors thank the World Bank for making the data available. The support of the Economic and Social Research Council ( UK) is gratefully acknowledged. The work is part of the program of the ESRC Global Poverty Research Group. Måns Söderbom thanks the Leverhulme Trust for financial support. The data used in this article can be obtained beginning October 2006 through September 2009 from Dr Måns Söderbom, Centre for the Study of African Economies, Department of Economics, University of Oxford, Manor Road Building, Oxford OX1 3UQ UK. E-mail: mans.soderbom@economics.ox.ac.uk.