Which human capital matters for rich and poor’s wages? Evidence from matched worker-firm data from Tunisia

We study the returns to human capital for workers observed in Tunisian matched worker-firm data in 1999. This tells us how these returns differ from those obtained in industrialised countries with matched data. We develop a new method based on multivariate analysis of firm characteristics, which allows us most of the benefits obtained by introducing firm fixed effects in wage equations for studying the effect of education. It also provides a human capital interpretation of these firm effects. Moreover, using three firm characteristics easily collectable yields results close to those obtained by using the matched structure of the data. Wage regressions including the computed factors confirm that human capital is associated with positive intra-firm externality on wages. Therefore, a given worker would be more productive and better paid in an environment strongly endowed in human capital. However, the poorest workers do not take advantage of human capital in the firm. Conversely, the poor benefit from working in the textile sector in terms of wages unlike the middle and high wage workers