International Journal of Social Science & Economic Research
Submit Paper

Title:
WORKER PRODUCTIVITY AND WAGES IN KENYAN MANUFACTURING SECTOR

Authors:
Anthony Wambugu

|| ||

Anthony Wambugu
School of Economics, University of Nairobi, Kenya

MLA 8
Wambugu, Anthony. "WORKER PRODUCTIVITY AND WAGES IN KENYAN MANUFACTURING SECTOR." Int. j. of Social Science and Economic Research, vol. 3, no. 1, Jan. 2018, pp. 135-152, ijsser.org/more2018.php?id=10. Accessed 2018.
APA
Wambugu, A. (2018, January). WORKER PRODUCTIVITY AND WAGES IN KENYAN MANUFACTURING SECTOR. Int. j. of Social Science and Economic Research, 3(1), 135-152. Retrieved from ijsser.org/more2018.php?id=10.
Chicago
Wambugu, Anthony. "WORKER PRODUCTIVITY AND WAGES IN KENYAN MANUFACTURING SECTOR." Int. j. of Social Science and Economic Research 3, no. 1 (January 2018), 135-152. Accessed , 2018. ijsser.org/more2018.php?id=10.

References
[1]. Akerlof, G. (1982). Labor contracts as partial gift exchange, Quarterly Journal of Economics, 97 (4), pp. 543-569
[2]. Akerlof, G. (1984). Gift exchange and efficiency wage theory: Four views. American Economic Review 74, pp. 79-83.
[3]. Akerlof, G. and Yellen, J. (1986). Efficiency Wage Models of the Labor Market. Cambridge University Press.
[4]. Azam, J. and Ris, C. (2001). Rent-sharing, hold-up and manufacturing wages in Cote d'Ivoire. World Bank Working Paper 2600.
[5]. Azam, J. and Leseuer (1997). Efficiency wage and supervision: Theory and application to Ivorian manufacturing sector. Journal of African Economies, vol. 6, number 3, pp.445-62.
[6]. Cappelli, P. and Chauvin, K.(1991). An interplant test of efficiency wage hypothesis. Quarterly Journal of Economics, 106, pp. 869-884.
[7]. Bigsten, A. (1984). Education and income determination in Kenya. Gower Publishing. Company, Gower House, Croft Road, Aldershot, England.
[8]. Bigsten, A., P.Collier, S.Dercon, B. Gauthier, M. Fafchamps, J.W.Gunning,A.Issacksson, A.Oduro, R.Oostendorp, C. Pattillo, M. Soderbom, F.Teal, A.Zeufack, and S.Appleton 2000.
[9]. Rates of return to human and physical capital in Africa's manufacturing sectors, Economic Development and Cultural Change: Volume 48, 4, 801-827.
[10]. Bulow, J. and Summers, L. (1986). A theory of dual labor markets with applications to industrial policy, discrimination and Keynesian unemployment. Journal of Labor Economics, 4, pp. 376- 414.
[11]. Huang, T., Hallam, A. and Orazem, P. (1998). Empirical tests of efficiency wage models. Economica 65, 125-43.
[12]. Husman, J. (1978). Specification tests in econometrics. Econometrica 46, pp.1251-1271.
[13]. Katz, L.(1986). Efficiency wage theories: a partial evaluation. NBER Macroeconomics Annual, pp. 235-276.
[14]. Konings, J. and Walsh, P. (1994). Evidence of efficiency wage payments in the U.K. firm level data., Economic Journal, 56, pp. 259-293.
[15]. Knight, J. and Sabot, R. (1990). Education, Productivity and Inequality: The East African natural experiment. Oxford University Press.
[16]. Kristensen, N. and Verner, D. (2008), Labor Market Distortions in Cote d'Ivoire: Analyses of Employer-Employee Data from the Manufacturing Sector, African Development Review, Vol. 20, No. 3., pp. 343-377.
[17]. Krueger, A. and Summers, L. (1988). Efficiency wages and the inter-industry wage Structure. Econometrica, 56, 259-93.
[18]. Leonard, J.(1987). Carrots and sticks: Pay, supervision, and turnover. Journal of Labor Economics, 5, pp. 137-152.
[19]. Levine, D. (1992). Can wage increases pay for themselves? Test with production Function. Economic Journal, vol. 102, Issue 414, 1102-1115.
[20]. Manda, D. (2002). Wage determination in Kenyan manufacturing, in Bigsten, A. and Kimuyu, P., (eds.), Structure and Performnace of Manufacturing in Kenya.Palgrave Palgrave Publishers Limited, Houndmills, Basingstoke, Hampshire,New York.
[21]. Manda, D., Bigsten, A. and Mwabu, G. (2005). "Trade union membership and earnings in Kenyan manufacturing firms," Applied Economics, vol. 37(15), pages 1693-1704
[22]. Pollin, R., Githinji, M. and Heintz, J. (2007). An Employment-Targeted Economic Programme for Kenya. Political Economy Research Institute (PERI). Amherst, MA.
[23]. Riveros, L. and Bouton, L. (1994). Common elements of efficiency wage theories: What relevance for developing countries? Journal of Development Studies, 30, pp. 696-716.
[24]. Salop, S. (1979). A model of the natural rate of unemployment, American Economic Review vol. 69, no. 1, pp.117-125.
[25]. Shapiro, C. and Stiglitz, J. (1984). Equilibrium unemployment as a worker discipline Device. American Economic Review, 74, 3: 433-444.
[26]. Solow, R.(1979). Another possible source of wage stickiness. Journal of Macroeconomics, 1, pp. 79-82.
[27]. Stiglitz, J. (1974). Alternative theories of wage determination and unemployment in LDCs: The labour turnover model. Quarterly Journal of Economics, vol. 81,pp. 194-227.
[28]. Soderbom, M. and Teal, F. (2001). Firm size and human capital as determinants of productivity and earnings, Working Paper xx, Centre for Studies of African Economies.
[29]. Teal, F. (1995). Efficiency wages and rent-sharing: A note and some empirical Findings. WPS/95-17, Center for the Study of African Economies, University of Oxford.
[30]. Teal, F. (1996). The size and sources of economic rents in a developing country manufacturing labour market. Economic Journal, vol. 106, issue 437, 963-976.
[31]. Valencik, A. (1997a). Market power, firm performance and real wage growth in Zimbabwe manufacturing firms. World Development, vol. 25, pp 749-762.
[32]. Valenchik, A.(1997b). Government intervention, efficiency wages, and the employer size wage effect in Zimbabwe. Journal of Development Economics, vol. 53:305-338.
[33]. Weiss, A. (1980). Job queues and layoffs in labor markets with flexible wages. Journal of Political Economy, vol. 88, pp. 526-538.
[34]. Wadhwani, S. and Wall, M. (1991). A direct test of the efficiency wage model using U.K.. micro-data. Oxford Economic Papers, 43, 817-38.
[35]. Wambugu, A.(2003). Essays on earnings and human capital in Kenya, Economic studies, no. 124, Department of Economics, Goteborg University

Abstract:
This paper investigated one possible source of labour market distortion in Kenya. The prediction of the efficiency wage hypothesis is tested in a production function framework applied to a panel of firms in Kenyan manufacturing industry. The results demonstrate that the relative wages of firms in this industry are positively related with value-added per worker. The results are consistent with the efficiency wage hypothesis that paying wages above the market clearing wage raises worker productivity. This provides a potential explanation of why real wages in the manufacturing sector did not decline in the study period despite the huge labour supply pressure. So, even in the absence of other sources of labour market distortion (e.g. unions and minimum wages) labour market distortion can be present due to efficiency wage considerations in firms' wage policy.