Wages and labor management in African manufacturing

Using matched employer-employee data on 10 African countries, this paper examines the relationship beween 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. Employee data is used to derive a firm-specific wage premium that is purged of the effect of worker observables. 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 in Morocco and a higher elasticity of effort with respect to supervision.