Wage Returns to Training in African Manufacturing
Posted: 8 Jan 2009 Last revised: 3 Feb 2009
Date Written: February 6, 2008
We study in this paper the impact of formal training on wages levels in two African countries (Kenya and Senegal) using the Regional Program on Enterprise Development (RPED) database collected by the World Bank. Thanks to the employer-employees data, we observe the potential impact of current training of employees on their actual wages in the firm. We run a cross-sectional econometric analysis, based on an employer-employee matched database that allows us to control for firm level effects. We corrected selection bias in the earnings equation with the method developped by Heckman to correct such a bias that could be a consequence of the endogeneity of training in the Mincerian equation. The model we drew makes it possible for us to control for endogeneity and selection bias for training. Such an analysis validate the theoretical hypothesis of a share of training costs between the employer its employees. We first used instrumental variables method to correct the endogeneity of the training variables in the model. Returns to on-the-job training was studied by a large panel of works, among which, the first one, that initiated the treatment models literature. In this paper, we make a rapid overview of such an analysis and then try to draw a comparative study from statistics of two different countries that are Senegal and Kenya.
Keywords: training, treatment, Mincer regressions
JEL Classification: C31, J24, J68, M54
Suggested Citation: Suggested Citation