Unit Labor Costs and Manufacturing Sector Performance in Africa

Naidoo, Karmen; Ndikumana, Léonce

Publication:
Unit Labor Costs and Manufacturing Sector Performance in Africa

dc.contributor.author	Naidoo, Karmen
dc.contributor.author	Ndikumana, Léonce
dc.contributor.department	University of Massachusetts Amherst
dc.contributor.department	Department of Economics, University of Massachusetts Amherst
dc.date	2023-09-24T03:59:31.000
dc.date.accessioned	2024-04-26T16:31:31Z
dc.date.available	2020-08-20T00:00:00Z
dc.date.issued	2020-01-01
dc.description.abstract	Several studies have highlighted that African manufacturing wages are higher than comparator countries at similar levels of development, which contributes to the continent’s lower levels of manufacturing competitiveness. This paper derives unit labor costs – average wages relative to productivity – for two-digit manufacturing sectors across a wide range of developed and developing countries over the 1990-2015 period. We benchmark the unit labor costs to China and estimate the impact of relative unit labor costs on manufacturing sector value added, employment, investment and exports. We find that relative unit labor costs have a smaller effect on manufacturing performance in Africa relative to other developing regions. Further, we find that for Africa, the level and growth of labor productivity have a quantitatively stronger and more robust effect on manufacturing performance than the level and growth of real wages. The results have important implications for industrial policy in African countries.
dc.identifier.doi	https://doi.org/10.7275/19042210
dc.identifier.uri	https://hdl.handle.net/20.500.14394/22276
dc.relation.ispartof	UMass Economics Working Papers
dc.relation.url	https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1295&context=econ_workingpaper&unstamped=1
dc.rights	UMass Amherst Open Access Policy
dc.source.issue	2020-10
dc.source.status	published
dc.subject	labor costs; productivity; manufacturing; exports; investment; Africa; China
dc.subject	Economics
dc.title	Unit Labor Costs and Manufacturing Sector Performance in Africa
dc.type	article
dc.type	article
digcom.contributor.author	isAuthorOfPublication\|email:knaidoo@umass.edu\|institution:University of Massachusetts Amherst\|Naidoo, Karmen
digcom.contributor.author	isAuthorOfPublication\|email:ndiku@econs.umass.edu\|institution:Department of Economics, University of Massachusetts Amherst\|Ndikumana, Léonce
digcom.date.embargo	2020-08-20T00:00:00-07:00
digcom.identifier	econ_workingpaper/293
digcom.identifier.contextkey	19042210
digcom.identifier.submissionpath	econ_workingpaper/293
dspace.entity.type	Publication
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