Rent-Sharing, Hold-Up, and Manufacturing Wages in Cote D'Ivoire

26 Pages Posted: 20 Apr 2016

See all articles by Jean-Paul Azam

Jean-Paul Azam

University of Toulouse I - Advanced Research in Quantitative Applied Development Economics (ARQADE)

Catherine Ris

University of Lyon 2

Date Written: May 2001

Abstract

Labor costs in Francophone Africa are considered high by the standards of low-income countries, at least in the formal sector. Workers appear to have some bargaining power and, in Cote d'Ivoire, can force renegotiation of labor contracts in response to new investments.

Labor costs in Francophone Africa are considered high by the standards of low-income countries, at least in the formal sector. Are they a brake on industrialization or the result of successful enterprise development? Are they imposed on firms by powerful unions or government regulations, or a by-product of good firm performance?

Azam and Ris empirically analyze what determines manufacturing wages in Cote d'Ivoire, using an unbalanced panel of individual wages that allows them to control for observable firm-specific effects. They test the rent-sharing and hold-up theories of wage determination, as well as some aspects of efficiency-wage theories.

Their results lean in favor of both rent-sharing and hold-up, suggesting that workers have some bargaining power and that in Cote d'Ivoire workers can force renegotiation of labor contracts in response to new investments.

This paper - a product of Public Services for Human Development, Development Research Group - is part of a larger effort in the group to understand the impact of labor market policies and institutions on economic performance. The study was funded by the Bank's Research Support Budget under the research project "The Impact of Labor Market Policies and Institutions on Economic Performance" (RPO 680-96).

Suggested Citation

Azam, Jean-Paul and Ris, Catherine, Rent-Sharing, Hold-Up, and Manufacturing Wages in Cote D'Ivoire (May 2001). Available at SSRN: https://ssrn.com/abstract=632669

Jean-Paul Azam (Contact Author)

University of Toulouse I - Advanced Research in Quantitative Applied Development Economics (ARQADE) ( email )

21 Allee de Brienne
Toulouse, 31000
France

Catherine Ris

University of Lyon 2

93 Chemin des Mouilles
69676 Bron Cedex
France