Women's urban labour market status in developing countries: How well do they fare in Khartoum,Sudan?

This article examines the insertion of women in the formal sector labour market in urban Khartoum, Sudan, in order to explain their inferior employment status in one particular developing country environment. A number of hypotheses are tested drawing upon recent labour market theoretical developments and econometric techniques from the literature which have had limited previous applications in Third World settings, particularly in Africa. Our findings indicate that occupational segregation, rather than pay discrimination, is primarily to blame for observed wage differentials suggesting that well‐intentioned equal pay laws will do little to reduce the earnings gap.     

Education,Employment and Earnings of Secondary School and University Leavers in Tanzania: Evidence from a Tracer Study

This study uses a tracer survey of secondary school completers in Tanzania to analyse the impact of educational qualifications on labour market earnings. We show that the rates of return to the highest educational qualifications for wage employees are not negligible and, at the margin, provide an investment incentive. However, we find little evidence of human capital effects in the earnings determination process for the self-employment sector. Introducing controls for father's educational background and a set of school fixed effects designed to proxy for school quality and potential labour market network effects reduces the estimated rates of return to educational qualifications. A comparison of our results with the available evidence from other countries in the region suggest that, despite an extremely small secondary and university education system, the private rates of return to education in the Tanzanian wage employment sector are comparatively low.     

Getting to the frontier

This article analyses a Stackelberg differential game in which households' labour supply and fertility decisions are taken assuming husbands as leaders and wives as followers. The model solution yields the optimal number of children and labour supply of male and female. In equilibrium male and female labour supply increases with wage and decreases with children costs and time preference, and the optimal number of children increases with male wage and decreases with cost of children, husband's time preference, and female's wage and time preference. We test the model using Ghana Living Standard Survey Round 4 and find that women are more sensitive to changes in the labour market conditions than males, and better labour market opportunities for women may lead to a strong reduction in fertility.     

Agrarian reform and seasonal employment in coastal Peruvian agriculture

This article attempts (i) to estimate intra‐year casual labour supply functions (ICLSF) for single field tasks to selected agricultural production cooperatives in Northern Peru; (ii) to explain the marked seasonal variation in wage rates paid by these cooperatives to casual workers; (iii) to evaluate the relevance of minimum wage legislation for casual labourers on these enterprises, and (iv) to assess the degree of labour market integration both within and between production cooperatives. Two types of labour supply function were identified: (a) perfectly elastic at the minimum wage, and (b) kinked ICLSF. Wage rates set in the cooperative's external labour market affect wage determination in its internal labour market. The casual labour markets in two valleys were found to be poorly integrated.     

Stature,Skills and Adult Life Outcomes: Evidence from Indonesia

We investigate the effect of height on earnings, occupational choices and a subjective measure of wellbeing among Indonesian men. We explore the extent to which height captures the effects of endowments set before entry in the labour market. Physical and cognitive skills, co-determined with stature early in life, do not explain much of the height earnings premium directly. Yet, human capital more broadly, including cognition, educational attainment and other factors related to childhood conditions, explains around half of the height premium and does so through occupational sorting. Indeed, taller workers tend to have more education, and educated workers tend to work in more lucrative occupations that require brain and social skills, not brawn. The unexplained share of the height earnings premium may reflect a specific role of stature on social interaction, labour market advantages or self-assurance. We also find a height premium in happiness, half of which simply accounts for the educational and earnings advantages of taller workers.     

Changes in earnings inequality and labour market segmentation: Metropolitan Santiago 1969–78

Changes in earnings inequality are examined in this article through an eclectic approach allowing for differences in human capital earnings function by labour market segments. Several findings are of interest. The first are the components of earnings inequality changes, these being, in order of importance: changes in the within segments inequality, changes in the relative share of the informal sector segment, and changes in relative income between segments. Second, these changes are found to be the result of labour market liberalisation policies such as abolition of both minimum wages and labour turnover legislation in the formal sector, the promotion of self‐employed activities in the informal sector, and, the selective mobility pattern between segments.     

Who Suffers the Penalty?: A Panel Data Analysis of Earnings Gaps in Vietnam

In spite of its predominant economic weight in developing countries, little is known about the informal sector earnings structure compared to that of the formal sector. Taking advantage of the rich VHLSS dataset in Vietnam, in particular its three wave panel data (2002, 2004, 2006), we assess the magnitude of various formal–informal earnings gaps while addressing heterogeneity at three different levels: the worker, the job (wage employment vs. self-employment) and the earnings distribution. We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers’ job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting Vietnam’s labour market specificity.     

Wage – labour activities by agricultural households in Nicaragua

This article considers wage?–?labour activities by agricultural households in Nicaragua. It analyses the role of: (1) comparative advantage as determined by individual and household characteristics; and (2) agricultural conditions and market imperfections, in shaping wage?–?labour supply. An econometric specification is developed which allows for random household-specific effects. Results reveal that non-agricultural wage work is largely determined by comparative advantages, whereas agricultural wage work is used to deal with a number of agricultural conditions and market imperfections.     

The Cost of Discrimination in Latin America

Indigenous and linguistic minorities are in an inferior economic and social position. The ethnic concentration of inequality is increasingly being recognized in the literature. In this review, studies from six Latin American countries that estimate the costs to an individual of being an economic minority are reviewed. The studies decompose the overall earnings gap into two components. One is the portion attributable to differences in the endowments of income-generating characteristics (“explained” differences) and the other is attributable to differences in the returns that majority and minority workers receive for the same endowment of income-generating characteristics (“unexplained”). This latter component is often taken as reflecting the “upper bound” of wage discrimination. In two studies for Bolivia, one using a 1966 survey and the other a 1989 survey, decomposition of the differential between indigenous and nonindigenous earnings leads to the conclusion that most of the overall differential is due to productivity. In Guatemala, Mexico and Peru, only one-half of the earnings differential can be attributed to differences in productivity-enhancing characteristics. In Paraguay, decomposition of the overall earnings differential between monolingual Spanish speakers and Guaraní speakers shows that most of the differential is explained by human capital differences. In Brazil, however, there is a significant cost to “being non-white.” Harry Anthony Patrinos is a Senior Education Economist at the World Bank. He leads the Economics of Education Thematic Group and manages EdInvest (www.worldbank.org/edinvest), the Education Investment Information Facility. He is co-author ofDecentralization of Education: Demand-Side Financing (1997). His latest co-edited book isPolicy Analysis of Child Labor: A Comparative Study (St. Martin's Press, 1999).Indigenous People and Poverty in Latin America: An Empirical Analysis (edited with George Psacharopoulos), was one of the first studies of the socioeconomic situation of indigenous peoples in Latin America.     

Gender wage inequality and export‐led growth in South Korea

This article investigates the relationship between gender, wage inequality, and export‐led growth in South Korea. The persistent gender wage gap in Korea's manufacturing sector is found to be linked to women's segregation in the country's major export industries where real wage growth has lagged productivity growth, despite favorable market conditions that might drive up women's wages relative to those of men. The interaction of state‐ and firm‐level hiring, training, and promotion practices that structure women's and men's employment opportunities differently appear to have resulted in a relatively weaker fall‐back position for women in labour markets. Econometric results are consistent with the hypothesis that women's weaker fall‐back position limits their ability to bargain for wage increases commensurate with productivity growth. Further, evidence is presented which links gender wage inequality to the growth of Korean exports.     

Wage determination in Brazil: The growth of union bargaining power and informal employment

This article examines wage determination in Brazilian manufacturing during the 1980s and early 1990s. It presents evidence to show that the reduction in state regulation of collective bargaining has led to the development of a system of wage determination which is increasingly characterised by rent sharing and insider trade union bargaining power. Real wages appear increasingly inflexible with respect to movements in open unemployment, with a large informal sector disciplining formal sector wage bargaining and cushioning the impact of broader labour market conditions. An important consequence of this is that the employment costs of a successful counter‐inflationary strategy may be very severe.     

Labour supply and wages among nuclear and extended households: The Surinamese experiment

This article explores labour market behaviour of members of extended and nuclear households in Suriname. Previous analyses have found that co‐operative childcare opportunities within the extended household increase female labour force participation. Such coordination implies correlated participation decisions, which invalidates standard assumptions made in estimating participation with probits and wages with regressions. We employ a GMM estimation, which allows correlation among household members. We find that extended and nuclear household members are not significantly different in participation propensities, but do differ significantly in wages. We argue that greater home production opportunities in extended households dilute labour market effort and hours, reducing earnings.     

Sex differences in earnings: An analysis of Malaysian wage data

The conventional human capital earnings function is applied to a rich set of Malaysian wage data in an attempt to determine the origins of sex differences in average earnings. Several findings are of interest, the first being that the relationships estimated from the earnings function are similar to those typically reported for non‐LDCs. Second, less than a third of the average monthly wage difference between the sexes of about 34 per cent appears to be the consequence of either females having lower (measured) productivity than males, or females receiving lower rates of return to human capital than males. The major part of the earnings difference is apparently a consequence of employment distributions: females are much more likely to be in the low‐paying occupations.     

Common elements of efficiency wage theories: What relevance for developing countries?

Conventional labour economics argues that wages are determined by supply and demand and that the typical firm is a wage taker. Efficiency wage theories state that wages are endogenous to a firm's own optimising behaviour and that the wage rate determines the labour productivity. These theories raise questions regarding the effectiveness of expenditure‐reducing and expenditure‐switching adjustment policies. This article reviews the theoretical and empirical literature on efficiency wages. It examines alternative models, highlights the emphasis of empirical research towards industrial countries, and points out the need for a test based on the major implications of the theory.     

The labour market in a dual economy: Another look at colonial Rhodesia

A labour market model is developed for the formal sector of a labour surplus economy, allowing for monopsony power by firm owners and an inelastic supply of labour with respect to the wage rate. This inelasticity arises even though the wage rate in the traditional sector may be ‘fixed’ due to surplus land, and the supply of labour to the traditional sector responds quite positively to an exogenous increase in the (implicit) wage rate there. This labour supply function is derived from a simple utility maximisation model incorporating the spatial aspects of temporary migration to the formal sector.     

Earnings and ethnicity in Trinidad and Tobago

This study employs 1993 Continuous Sample Survey of the Population (CSSP) data for Trinidad and Tobago to investigate the determinants of earnings by ethnicity. The data, organised into three ethnic groupings, reveal lower levels of remuneration in the labour market for Africans and Indians than for individuals of other ethnicities taken as a whole. While the larger portion of the earnings differentials generally appears to be explained by ethnic differences in characteristics valued by the labour market, Africans and Indians would benefit substantially if they were to receive the same rates of remuneration for their educational endowments as workers of other ethnicities in the Trinidad and Tobago labour market. Notwithstanding Indians’ lowest average earnings, Africans appear more likely to be discriminated against.     

Inter‐industrial wage differentials: Evidence from Latin American countries

The recent literature on inter‐industrial wage differentials for the United States suggests that the labour market equilibrium features non‐competitive elements. However, the lessons from the United States need not carry over to other countries, especially developing economies. This article analyses the wage differentials in selected Latin American countries. Despite the sharp contrasts between the Latin American and the US economies, our results show more similarities than differences with those reported in past studies. Wage differentials are substantial and persist over time; the differentials are also correlated across occupations and, to a lesser extent, across establishment sizes.     

Simulating commercial policy in a small,open dual economy with urban unemployment: A general equilibrium approach

A two‐sector numerical general equilibrium model calibrated on Kenyan data is used to consider second‐best tariff policy in an economy with a distorted market for urban‐industrial labour and urban unemployment. The results illustrate the sensitivity of second‐best policy to the way the administered urban wage is determined (whether it is fixed primarily in terms of food or the manufactured good), and to the degree of inter‐sectoral mobility of capital. Efficiency gains from moving to a second‐best policy are shown to be small in comparison with the gains from eliminating the wage distortion in the first place.     

Active Labour Market Programmes in Latin America and the Caribbean: Evidence from a Meta-Analysis

We present a systematic review and meta-analysis of impact evaluations of active labour market programmes (ALMPs) in Latin America and the Caribbean (LAC). We extract 296 impact estimates from 51 programme evaluations to analyse the effects of participation on employment, earnings, hours worked, and formality. Our analysis finds that the probabilities of being employed and in formal employment are the labour market indicators most likely to be positively affected by ALMPs in LAC. Moreover, ALMPs are more successful among women and youth and when they are implemented during periods of economic expansion. Training programmes increase both formal employment and earnings; training is particularly effective when it is more intensive and when explicitly targeting poor individuals.     

Adjustment,stabilisation and the structure of employment in Brazil

A significant change in the structure of employment in Brazil in the period 1988–95 took place. Industrial employment fell, especially in the most traditional sectors such as clothing, textiles and footwear. There has been a shift of workers from the industrial sector to the services sector and an increase in the share of self‐employed workers and informal wage earners. The quality of jobs being created in the services sector are not of the same ‘quality’ as those in the industrial sector, leading to a deterioration of employment conditions and of the labour market performance. Hence the rate of unemployment is not a very good measure of labour market conditions during adjustment. The creation of jobs in general might therefore not be an explicit target under adjustment. Rather the objective should be trying to change labour market institutions in order to improve the quality of the jobs and the quality of the labour relations.