Wages and Labor Management in African Manufacturing

Using matched employer-employee data on 10 African countries, this paper examines the rela-tionship beween wages, worker supervision, and labor productivity in manufacturing. Wages increase with Þrm size for both production workers and supervisors. We develop a two-tier model of super-vision that can account for this stylized fact and we Þt the structural model to the data. Employee data is used to derive a Þrm-speciÞc wage premium that is purged of the effect of worker observables. We Þnd a strong effect of both supervision and wages on effort and hence on labor productivity. La-bor management in sub-Saharan Africa appears problematic, with much higher supervisor-to-worker ratios than in Morocco and a higher elasticity of effort with respect to supervision