The role of the firm in worker wage dispersion: an analysis of the Ghanaian manufacturing sector

Artikel

This paper uses a linked employer-employee dataset from the Ghanaian manufacturing sector to analyze earnings dispersion in Ghana from 1992 to 2003, a period post extensive economic reforms. I find that variance of earnings increased from 1992 to 1998 and decreased thereafter, resembling an inverted u-shaped relationship. I use analysis of variance and variance decomposition approaches to understand the underlying factors that led to such a pattern in earnings inequality. I find that between-firm factors explain this pattern more than within-firm factors. I also find that the mean earnings gap between workers above and below the 90th percentile of income distribution can explain the majority of the initial surge in inequality (61 %) but only explains a very small fraction of the eventual decline (9 %). I run OLS regressions similar to Mincerian equations and decompose the variance components to find that the decline in earnings inequality is consistent with decline in variance of firm-level earnings whereas variance of predicted wage from worker characteristics have increased. I also find suggestive evidence of changing patterns of worker-firm sorting which contributes to the decline in inequality. These patterns however only hold up for private domestic firms and not for foreign-owned firms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: IZA Journal of Labor & Development ; ISSN: 2193-9020 ; Volume: 5 ; Year: 2016 ; Issue: 16 ; Pages: 1-21 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials ; Economic Development: Human Resources; Human Development; Income Distribution; Migration
• Subject: Wage dispersion ; Inequality ; Firm effects ; Analysis of variance ; Variance decomposition

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chatterjee, Somdeep
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2016

Further information

• DOI: doi:10.1186/s40175-016-0062-x
• Handle: http://hdl.handle.net/10419/169299
• Last update: 10.03.2025, 11:44 AM CET