Why wages differ : earnings in a poor urban economy

This s e r i e s of u n r e f e r e e d d i s c u s s i o n papers is intended t o p r o v i d e an i n i t i a l circu:Lation of work prepared under t h e a u s p i c e s of t h e Fopulntion and Hman Rescurces D i v i s i o n . C c m e n t s a r e t h e r e f o r e v e r y welccze. The papers shculd n o t be c - ~ e d without c1ea:rancc by t h e a u t h o r s . The views expressed a r e n o t n e c e s s a r i l y t h o s e of t h e World Bank Group. P o p u l a t i o n and Human Resources ibisi ion Discussion Paper Nc . 51-39 I WHY WAGES DIFFER: FARNINGS FUNCTIONS I N A POOR URBAN ECOEU'O-MT August 1981 Prepared by: J.B. &ight - and S t a t i s t i c s I n s t i t u t e of ~ c o n o d c s R.H. S a b o t D e v e l c p ~ e n tEconomics r rpzrtment The World Bank Xashington DC 20433 USA  Abstract The p a p e r b r i n g s t o g e t h e r and s - m m a r i z e s t h e s a i n r e s l i t t s of a n e a r n i n g s f u n c t i o n a n a l y s i s of a 1 9 7 1 s u r v e y o f employees i n t h e s a n u f a c t u r i s g s e c t o r o f Tanzania. Its nethodological contributions a r e t h e conbination o f p e r s o n a l and f i r m c h a r a c t e r i s t i c s , t h e a t t e m p t s t o d e l v e i n t o and e x p l a i n t h e r e l a t i o n s h i p s r e v e a l e d by c o n v e n t i o n a l e a r n i n g s f u n c t i o n a n a l y s i s , and u s e of t h e a n a l y s i s t o e x m i n e n o t o n l y t h e s t r u c t u r e but a l s o t h e i n e q u a l i t y o f wages. X policy-related d i s t i n c t i o n i s made through- o u t between t h e p r o d u c t i v e , "human c a p i t a l " c h a r a c t e r i s t i c s and t h e "segnen- t a t i o n " v a r i a b l e s , which a r e u n l i k e l y t o r e p r e s e n t p r o d u c t i v e c h a r a c t e r i s t i c s . I t i s found t h a t l a b o u r market d i s c r i m i n a t i o n by r a c e i s i n p o r t a n t whereas d i s c r i n i n a t i o n by s e x i s n o t , ' a n d t h a t t h e r e i s s e g m e n t a t i o n of t h e l a b o r market by employment s t a t u s and among f i m s . However, t h e r,ole of p a r t i c u l a r c h a r a c t e r i s t i c s of f i m s - which might e x p l a i n such s e g z e n t a t i o n - i s found t o be weak. The human c a p i t a l v a r i a b l e s a c c o u n t For t h e n a j o r p a r t of t h e i n e q u a l i t y o f pay. A n a l y s i s of t h e e x p e r i e n c e v a r i a b l e s - representing the a c q u i s i t i o n of human c a p i t a l on t h e j o b - can e x p l a i n t h e remarkable t r a n s f o r m a t i o n , o v e r l e s s t h a n two d e c a d e s , o f s h o r t t e r n c i r c u l a r m i g r a n t s i n t o s t a b l e p r o l e t a r i a n s w i t h low r a t e s o f l a b o u r t u r n o v e r . The l a r g e c o n t r i b u t i o n s o f o c c u p a t i o n , e d u c a t i o n and i n t e r a c t i o n between e d u c a t i o n L . L and e x p e r i e n c e t o t h e s t r u c t u r e and d i s p e r s i o n of ..ages a r e open t o more t h a n one i n t e r p r e t a t i o n . The r e s u l t s c o u l d r e f l e c t a p o c e s s o f " f i l t e r i n g - - - down" o f e d u c a t e d l a b o u r i n t o l e s s e r j o b s i n condi*ons of occupational & ' wage i n f l e x i b i l i t y a s e d u c a t i o n expands. Ti s o , tk "hunan c a p i t a l " B * ' v a r i a b l e s do coc r z p r e s e n t p r o d u c t i - , e c h a r a c t e r i s t i e s a l o n e , and t h e r e a r e implications f o r estimating the r e t u r s s t o education. Further elucidation r e q u i r e s dynamic a n a l y s i s of t h e s o r t c u r r e n t l y b e i n g c o n d u c ~ e di n 3 % - 6 7 2 - 0 1 .  Wage r L t e s a r e , p e r h a p s , t h e n o s t i m p o r t a n t p r i c e s i n t h e e c o n o n i c systa. They d e r i v e t h e i r i m p o r t a n c e from b o t h t h e i r d i s t r i b u z i v e znd a l l o - c a t i v e functions. T h e i r d i s t r i b u t i v e f u n c t i o n has long Seen recognizsd, b u t among e c o n o n i s t s s e e k i n g t o e x p l a i n t h e r o l e of wage r a t e s i n t h e d i s - t r i b u t i o n o f income, t h e f o c u s h a s s h i f t e d from f a c t o r s h a r e s t o t h e i n e q u a l i t y o f pay. T h i s s h i f t i s p a r t l y due t o t h e marked i n c r e a s e i n t h e c o n t r i b u t i o n of i n e q u a l i t y o f e a r n i n g s from employnent t o t o t a l income i n e q u a l i t y i n i n d u s t r i a l i z e d e c o n o m i e s ; p e r h a p s t h r e e q u a r t e r s of t h e t o t a l may b e s o e : c ? l a i n e d . / l- I n d e v e l o p i n g c o u n t r i e s t h e c o n t r i b u t i o n of i n e q u a l i t y o f 2 z y t o t o t a l i n e q u a l i t y i s much s m a l l e r , b u t t h e d e g r e e of i n e q u a l i t y o f pay i s g r e a t e r a n d , w i t h t h e r e l a t i v e growth o f wage enploymen:, i t s contribution t o t o t a l incone i n e q u a l i t y i s increasing. The a l l o c z c i v e f u n c t i o n of u a g e s i s no l e s s i m p o r t a n t : t h e e x t e n t of c o n f l i c t between e q u i t y and e f f i c i e n ~ y c o n s i d e r a t i o n s s h o u l d be c e n t r a l t o t h e d e b a t e o v e r v a g e p o l i c i e s , h o t l y c o n t e s t e d i n many d e v e l o p i n g c o u n t r i e s . I A i l e t h e a n a l y t i c a l and p o l i c y l i t e r a t u r e o n wage d e t e m i a a t i o n i s p l e n t i f u l , e n p i r i c a l work i n d e v e l o p i n g c o u n t r i e s i s s c a n t y . The aim of most m u l t i v a r i a t e a n a l y s e s of wages h a s b e e n s i m p l y t o e s t i n a t e r a t e s o f . t r e t u r n t o i n v e s t m e n t in e d u c a t i o n f o r t h e f o r m u l a t i o n of e d u c a t i o n a l p o l i c y . The u s u a l l a b o r f o r c e d a t a a r e i n a d e q u a t e f o r d e t a i l e d a n a l y s i s of wage s t r u c t u r e s and of t h e l a b o r narlcet p r o c e s s e s t h a t d e t e d n e d them. Because - 1/ P h e l p s Brown ( 1 9 7 7 ) , p. 6. 3 l i n d e r ( 1 9 7 4 ) ?. 1 2 2 , bas shown t h a t t h e e f f e c t of e q u a l i z i n g wages would b e t o r e d u c e t h e G i n i c o e f f i c i e n t f o r income i n e q u a l i t y i n t h e U n i t e d S t a t e s by 55 p e r c e n t . t h e y a r e g e n e r a t e d by h o u s e h o l d s u r v e y s c o v e r i n g t h e e n t i r e u r b a n p o p u l a t i o n , s u c h d a t a s e t s i n c l u d e a h i g h p r o p o r t i o n of i n d i v i d u a l s who do n o t p a r t i c i p t e i n t h e l a b o r n a r k e t , o r a r e unemployed, o r have non-wage s o u r c e s of income. C o n s e q u e n t l y r e s e a r c h e r s have had t o c o n d u c t t h e i r a n a l y s e s o f wages a t h i g h l e v e l s of a g g r e g a t i o n : e s t i i n a t e s of s e p a r a t e e a r n i n g s . f u n c t i o n s f o r d i f f e r e n t s t r a t a of t h e sample a r e o f t e n p r e c l u d e d by s m a l l c e l l s i z e . Because of i n s u f f i c i e n t o b s e r v a t i o n s i n p a r t i c u l a r f i r m s , i t h a s n o t been f e a s i b l e t o i n t e g r a t e d a t a on t h e c h a r a c t e r i s t i c s of employees and t h e i r e n p l o y e r s , t h u s p r e c l u d i n g from c o n s i d e r a t i o n hyp - h e s e s which c o n c e r n firin c h a r a c t e r i s t i c s . I n o u r r e s e a r c h , which ue s u n n a r i z e h e r e , we have used d e t a i l e d d a t a from T a n z a n i a g e n e r a t e d by a 1 9 7 1 e s t a b l i s h e n t - b a s e d s u r v e y o f t h e m a n u f a c t u r i n g s e c t o r , s p e c i a l l y d e s i g n e d by o n e of t h e a u t h o r s t c a v o i d these deficiencies. The randon sample of Dar e s Salaam, stratified by s i z e o f f i r m , c o n t a i n s a b o u t 1 , 0 0 0 wage e a r n e r s i n h 6 f i r m s : f o r a c o n v e n t i o n a l u r b a n l a b o r f o r c e s u r v e y i n T a n z a n i a t o have a s many r e s p o n d e n t s among n a n u f a c t u r i n g employees, i t s t o t a l s a m p l e s i z e would have t o be a o r e chan t e n t i n e s t h e s i z e of o u r s u r v e y . D a t a on f i r m c h a r a c t e r i s t i c s were o b t a i n e d from t h e 1 9 7 1 i n d u s t r i a l c e n s u s r e t u r n s o f t h e 2 4 l a r g e r f i r m s . I n u r b a n T a n z a n i a o n l y o n e i n f o u r male and one i n s i x f e n a l e wage e a r n e r s i s employed i n m a n u f a c t u r i n g . Analysis o f . a household survey c o n d u c t e d i n p a r a l l e l w i t h t h e e s t a b l i s h m e n t s u r v e y r e v e a l s , however, t h a t - t h e d i s t r i b u f i o n of s u c h i n d i v i d u a l c h a r a c t e r i s t i c s of m a n u f a c t u r i n g r - C - workers a s eLucationa1 a t t a i n m e n t is v e r y s i m i l a r t o t h a t f o r a l l urban employees. B e r e a s a a n u f a c t u r i n g employees n a y b e c o n s i d e r e d an e l i t e r e l a t i v e t o the urban and, i n p a r t i c u l a r , t h e r u r a l populations, they a r e n o t a n e l i t e i n comparison ., :h o t h e r u r b a n wage e a r n e r s . Yoreover, r e s u l t s of n u l t i v a r i a t e a n a l y s i s /- l ;ssfd on t h e h o u s e h o l d s u r v e y i n d i c a t e t h a t t h e m a n u f a c t u r i n g s e c t o r l a b o r market i s n o t a n i s o l a t e d segment, p r o t e c t e d from t h e c o m p e t i t i v e and i n s t i t u t i o n a l f o r c e s o p e r a t i n g e l s e w h e r e i a t h e wage l a b o r m a r k e t . D i f f e r e n c e s i n mean e a r n i n g s between s e c t o r s a r e l a r g e l y e x p l a i n e d by d i f f e r e n c e s , s s a l l though t h e y a r e , i n l a b o r f o r c e composition. This suggests t h a t i t i s l e g i t i a a t e to g e n e r a l i z e our findings t o t h e u r b a n wage l a b o r a a r k e t a s a whole. Our a n a l y s i s draws p r i n c i p a l l y o n t-70 t h e o r e t i c a l frameworks. W i t h i n t h e franework of human c 2 p i t a l t h e o r y , which can be t r a c e d t o S n i th's compensatory p r i n c i p l e , w o r k e r s a r e rewarded f o r t h e i r p r o d u c t i v e characteristics. Yuch of t h e t h e o r y s c r e s s e s t h e o p e r a t i o n of t h e f o r c e s o f c o m p e t i t i o n i n t h e l a b o r m a r k e t , t h e r e b y p e r m i t t i n g t h e d e r i v a t i o n of s u c h a n a l y t i c p r e d i c t i o n s as p a p e n t f o r t h e s k i l l s which w o r k e r s a c q u i r e j u s t compensates them f o r t h e i n v e s m e n t s made t o a c q u i r e them. !:evertheless, t h e human c a p i t a l framework i s a l s o r e l e v a n t where rewards f o r s k i l l s a r e t h e c o n s e q u e n c e of e x p l i c i t n a n a g e n e n t d e c i s i o n s t a k e n b o t h a t t h e f i n and a a c r o l e v e l s and enbodied i n r u l e s g o v e r n i n g i n t e r n a l l a b o r n a r k e t s and i n government wage p o l i c i e s . The o t h e r f r a n e w o r k , i n c o r p o r a t i n g t h e o r i e s o f d i s c r $ n i n a t i o n and s e g m e n t a t i o n , h a s e v o l v e d from Xills' and C a i r n e s ' . , d o c t r i n e o f non-competing g r o u p s . I t c ~ p h a s i z e swage d i f f e r e n c e s among - w o r k e r s w i r h t h e same p r o d u c t i v i t y , g e n e r a l l y a t t r i b u t e d t o c o n s t r a i n t s on '5 l a b o r and p r o d u c t market c o m p e t i t i o n . - I t implies i h a t c h a r a c t e r i s t i c s of employees n o m a l l y n o t r e g a r d e d a s d e n o t i n g & i d i v i d u a l p r o d u c t i v i t y v i l l - 1 : b i g h t and S a b o t ( 1 9 8 0 ) , c h . 1. i n f l u e n c e t h e i r e a r n i n g s , as w i l l c e r t a i n c h a r a c t e r i s t i c s of t h e i r employers. Our a p p r o a c h t o h y p o t h e s i s t e s t i n g i s by z e a n s o f e a r n i n g s f u n c t i o n s I n which ( t h e n a t u r a l l o g a r i t h m o f ) i n d i v i d u a l e a r n i n g s i s t h e dependent v a r i a b l e . X d i s t i n c t i o n c a n b e drawn between t h e " p e r s o n a l " and the "firmW-/ l independent v a r i a b l e s . W i t h i n t h e g r o u p of p e r s o n a l v a r i a b l e s a f u r t h e r d i s t i n c t i o n c a n b e d r a m between "human c a p i t a l " a n d " s e g m e n t a t i o n " variablss. Our a n a l y s i s f o l l o w s t h i s t r i p a r t i t e d i v i s i o n s o f t h e hypo- t h e s i z e d d e t e r m i n a n t s o f s a n u f a c t u r i n g wages. The r e g r e s s i o n s t h a t we draw upon c a n b e c l a s s i f i e d i n t o f o u r s e t s a c c o r d i n g t o t h e sample used and t h e i n d e p e n d e n t v a r i a b l e s i n c l u d e d . S e t A , r e l a t i n g t o t h e f u l l sample, c o n t a i n s t h e p e r k o n a l v a r i a b l e s ; s e t B adds t o these the dumy variables representing each f i m . Set C, using ihe sub-sample of employees i n l a r g e f i n s , c o n t a i n s t h e p , z r s o n a l p l u s t h e f i r n characteristic variables. S e t D , r e l a t i n g t~ tile. sub-sample of A f r i c a n r e g u l a r a p l o y e e s , i s c o n p r i s e d o f t h e persona.'. v a r i ~ b l e se x c l u d i n g o f c o u r s e t h e r a c e and employaent s t a t u s v a r i a b l s s . I n S e c t i o n I we examine w h e t h e r t h e r e i s d i s c r i m i n a t i o n and s e g m e n t a t i o n i n t h e wage l a b o r m a r k e t . W e a t t e m p t co e x p l a i n t h e d i s c r h i - n a t i o n and s e g m e n t a t i o n t h a t w e f i n d , a n d measure t h e i r e f f e c t s o n e a r n i n g s C s t r u c t u r e s a n d t h e i n e q u a l i t y o f pay. S i z e o f f i r m , " a b i l i t y t o pay," f o r e i g n o w n e r s h i p and t h e d e g r e e of u n i o n i z a t i o n are e a c h a s s e s s e d i n - i e x p l a i n i n g t h e i n f l u e n c e of f i r m affiliation. S e c t i o n I1 i s c o n c e r n e d .g - w i t h t h e v a r i a b l e s n o r s a l l y r e g a r d e d a s r e p r e s e n t i n g human c a p i t a l . Lie = i . E c ! - 1 V a r i a b l e s which assume t h e same v a l u e f o r a l l w o r k e r s i n a p a r t i c u l a r firm.  a s s e s s t h e i r i n f l u e n c e o n t h e s t r u c t u r e and t h e d i s p e r s i o n o f e a r n i n g s , and examine t h e r e a s o n s f o r t h i s i n f l u e n c e . A t t e n t i o n i s paid t o evidence b e a r i n g o n t h e d i f f e r e n c e between g e n e r a l and f i n - s p e c i f i c training, to t h e r o l e of occupation, and t o the i n t e r a c t i o n s Setveen e d u c a t i o n a l a t t a i n - ment and l e n g t h o f wage employment which a r e r e v e a l i n g o f t h e e f f e c t s o f r a p i d e d u c a t i o n a l e x p a n s i o n on t h e r e t u r n s t o e d u c a t i o n . S e c t i o n I11 g e n e r a l i z e s and c o n c l u d e s . I. S e g m e n t a t i o n and D i s c r i m i n a t i o n By d i s c r i i n i n a t i o n we mean t h a t sone w o r k e r s a r e p a i d more t h a n o t h e r s w i t h t h e saine e n d o m e n t o f p r o d u c t i v e Scononic c h a r a c t e r i s t i c s by v i r t u e o f sone p e r s o n a l c h a r a c t e r i s t i c which i x a p e r f e c t l y c o m p e t i t i v e economy would n o t i n f l u e n c e e a r n i n g s . Our c o n c e r n i s w i t h d i s c r i n i n a t i o n by s e x and r a c e . By s e g m e n t a t i o n we mean t h a t some w o r k e r s a r e paid = o r e t h a n o t h e r s .with t h e same e n d o m e n t o f p r o d u c t i v e economic c h a r a c t e r i s t i c s by v i r t u e of some g r o u p a f f i l i a t i o n , which i x a p e r f e c t l y c o m p e t i t i v e l a b o r inarket would n o t i n f l u e n c e e a r n i n g s . The t h e o r y o f c o m p e t i t i v e n a r k e t s p r e d i c t s t h a t w h e t h e r a worker i s p a i d by t h e day o r t h e non:h, vorks i n o n e s e c t o r r a t h e r t h a n a n o t h e r o r works f o r one employer r a t h e r t h a n a n o t h e r s h o u l d have no i n d e p e n d e n t i m p a c t o n e a r n i n g s : c h e o r i e s o f segmen- I I t a t i o n p e r m i t s u c h a n impact. Our c o n c e r n i s .with s e g m e n t a t i o n by emp?Loyment s t a t u s ( ~ e r i o dof payment) and amcng f i n s . 3 0 t h d i s c r i n i n a t i o n and s e g m e n t a t i o n i n v o l v e n a r k e t i x p e r f e c t i o n s b u t a r e o f t e n as much a s a t t e r of c o n c e r n f o r r e a s o n s o f s o c i a l j u s t i c e a s f o r :he a l l a c a t i v e i n e f f i c i e n c i s s t o which t h e y may g i v e r i s e . - E  Table 1 d e a l s with t h e t h r e e eaployee c h a r a c t e r i s t i c s , sex, r a c e and c a p l o p e n t s t a t u s . Let va r e p r e s e n t t h e n e a n wage of a e n , - n o n - A f r i c a n s o r r e g u l a r employees, and v b t h a t of .;omen, .Africans o r c a s u a l employees; i n e a c h c a s e t h e h i g h e r p a i d group i s r e p r e s e n t e d by a . The t a b l e shows a, t h e p e r c e n t a g e by v h i c h t h e mean wage of t h e h i g h e r p a i d g r o u p e x c e e d s t h a t of t h e lower p a i d . This figure i s contrasted with t h e v a l u e of 3 , when 5 r e p r e s e n ' s t h e a v e r a g e F e r c e n t a g e by which t h e pay of g r o u p a e x c e e d s t h a t of group b a f t e r s t a n d a r d i z i n g f o r a l l o t h e r personal variables. 3 i s d e r i v e d from t h e c o e f f i c i e n t on t h e dummy v a r i a b l e d e n o t i n g g r o u p a ( w i t h g r o u p b a s t h e b a s e c a t e g o r y ) i n :he earnings function f o r the f u l l sample./l - 5 c a n be a a i s l e a d i n g i c d i c a t o r of t h e d a g n i t u d e of d i s c r i n i a a - t i o n o r s e g n e n t a t i c n when t h e r e 2 r e marked d i f f e r e n c e s i n t h e 'wage structure' ( c o n s t a n t terms and c o e f f i c i e n t s i n s e p a r a t e e a r n i n g s f u n c t i o n s ) b e m e e n men and wonen, A f r i c a n s and non-Africans, and r e g u l a r and c a s u a l employees. T h e r e f o r e , we g o on t o a p p l y s t a n d a r d h e c h n i q u e s of d i s c r i m i - - The n a t i o n a n a l y s i s v h i c h t a k e a c c o u n t of s u c h d i f f e r e n c e s i n s t r u c t u r e . / 2 a e t h o d i s i l l u s t r a t e d i n t e r n s of t h e s e x e s . -Assme t h a t t h e nean wage of men i s d e t e r n i x e d by t h e e a r n i n g s f u n c t i o n -Ja= f a ( S a ) , where 2a are t h e s e a n v a l u e s o f a . v e , c t o r of c h a r a c t e . r i s t i c s . T;e s e a n wage t h a t women would r e c e i v e i f t h e y were p a i d a c c o r d i n g t o t h e male wage s t r u c t u r e i s - 1/ SeeZYalvorsen and P a l m q u i s t (1980) f o r t h e d e r i v a t f o n . * - 2/ S e e r f o r i n s t a n c e , B l i n d e r ( 1 9 7 3 ) , Oaxaca ( 1 9 7 3 ) , Y a l k i e l and Y a l k i e l ( 1 9 7 3 ) ) and Brown, Xoon and Z o l o t h ( 1 9 8 0 ) . fa(xb). The g r o s s d i f f e r e n c e i n meaa wages ( G ) S e t T i e n n e n and women can be d i v i d e d i n t o t h e p a r t " s x p l a i n e d " by d i f f e r e n t p e r s o n a l c h a r a c t e r i s t i c s ( E ) and t h e u n e x p l a i n e d r e s i d u a l (X), r e f l e c t i n g d i f f s r e n c e s i n t h e wage s t r u c t u r e s o f a e n and women, which i n t h i s c a s e cai. be a t t r i S u t s d t o labor narket d i s c r h i n a t i o n : - G Wa - Gb = (" - fa(")) + (fa(Gb) - wb) = 2 + R respectively. s i m i l a r d e c o n p o s i t i o n c a n be o b t a i c e d by s u b s t i t u t i n g fb(-Ya) f o r f a ( G b ) , i.e., t h e wage r e c e i v e d by men i f t h e y were p a i d a c c o r d i n g t o t h e f e m a l e wage s t r u c t u r e . ( i ) D i s c r . f . a i n a t i o n bv Sex I n t h e c a s e o f s e x , a comparison of a 2nd 3 suggests the t h i r d more t h a t n e r , on a v e r a g e , e a r n t h a n women i s e n t i r z l y e x p l a i n e d by s e x d i f f e r e n c e s i n ocher c h a r a c t e r i s t i c a . The d i s c r i a i c a t i o n a n a l y s i s , showing E aitd R a s a p r o p o r t i o n of S, c o n f i r m s t h i s c o n c l u s i o n . \!ost of E i s due t o t h e v a r i a b i e s measuring e m p l o p e n t experieace; r e l a t i v e t o f e m a l e s , m l e s have 1 . 6 and 5 . 7 t i m e s thc: nunber of y e a r s o f e x p e r i e n c e i n p r e v i o u s and c u r r e n t employment r e s p e c t i v e l y . ~ i r ' f e r e n c ei n e d u c a t i o n a l a t t a i m e n t ( 4 . 0 mean y e a r s of s c h o o l i n g f o r men and 3 . 9 f o r women) c o n t r i - butes l i t t l e . There a r e marked s e x d i f f e r e n c e s i n o = c u p a t i o n a l distribution. a L For i n s t a n c e , 58 p e r c e n t or' women a r e i n 11-xikilled j o b s and 4 p e r c e n t iil s l k i l l + d j o b s , v n e r e a s o n l y 2 1 p e r c e n t o f a e n a r e u n s k i l l e d and 30 p e r c e n t - - are skilled. These d i f f e r e n c e s c o u l d be t h e r e s u l t or' s e x d i f f e r e n c e s i n i . productive~charactzristicso r of j o b d i s c r i a i n a t i o n . Our a p p l e a t i o n o f B b t h e n a l e " ~ c c u p a t i o n a la t t a i n m e n t f u n c t i o n " t o women i n d i c a t z s That roughly h a l f of the d i f r e r e n c e i n earnings a t t r i b u t a b l e t o occupation is due t o j o b d i s c r h i n a t i o n . / l - Xowever, e v e n t h e t o t a l e f f e c t of occupa- t i o n on e a r n i n g s i s s l i g h t . Occupational d i f f e r e n c e s account f o r only a m i a o r p a r t of E./2 - Xoreover, p e r s o n a l c h a r a c t e r i s t i c s c a 2 e x p l a i n over 80 - even when no s t a n d a r d i z a t i o n i s 3 a d e f o r o c c u p a t i o n , i . e . , p e r c e n t of G/3 t h e occupation v a r i a b l e s a r e excluded f r o = t h e - r e g r k s s i c n . Nor i s i t t h e n a t u r e of t h e i r o c c u p a t i o n s which d e t e r s wonen from a c q u i r i n g e x p e r i e n c e : t h e c o e f f i c i e n t s on employment e x p e r i e n c e a r e n o t n o t i c e a b l y l o w e r f o r wonen./q T h i s f a c t and t h e r e m a r k a b l e y o u t h f u l n e s s o f f e n a l e employees ( 1 8 p e r c e n t b e i n g u n d e r 20 and 9 3 p e r c e n t under 35) s u g g e s t tha; the d i f f e r e n c e i n employment e x p e r i e n c e i s e i t h e r a l i f e - c y c l e phenomenon o r i t - r e f l e t s t h e r e c e n t e n t r y o f vonen t o a a n u f a c t u r i n g e m p l o y a e n t . / 5 - Our f i n d i n g s a r e a t .odds w i t h t h e f i n d i n g s of ap i m p o r t a n t r o l e f o r sex d i s c r k i i l a t i o n i n analogous s t u d i e s f o r t h e United S t a t e s . For - 1/ K n i g h t and S a b o t ( 1 9 8 1 b ) , T a b l e 6 . 2/ - The h i g h p r o p o r t i o n of wonen i n u n s k i l i e d j o b s i s o f f s e t , i n i t s e f f e c t on e a r n i n g s , by t h e i m p o r t a n c e or' vomen ( 1 8 p e r c e n t , c c . ; l ~ e r e d with 1 1 p e r c e n t of men) i n c l e r i c a l j o b s . Over 100 p e r c e n t i n t h e r e g r e s s i o n s b a s e 2 on f e m a l e c o e f f i c i e n t s ! The r e s u l t s b a s e d on t h e s a l e c o e f f i c i e n t s a r e s o r e r e l i a b l e , however: t h e female r e g r e s s i o n s c o n t a i n u n d e r 8 0 o b s e r v a t i o n s , and t h e i r r e s u l t s a r e s e n s i t i v e t o t h e v a l u e s of t h e i n s i g n i f i c a n t c o e f f i c i e n t s on t h e occupation dumy v a r i a b l e s . The c o e f f i c i e n t on p r e v i o u s enployment e u ~ e l i e n c r?s a c t u a l l y h i g h e r f o r women t h a n f o r men, and t h e c o e f f i c i e n t oq c u r r e n t employment ex- p e r i e n c e i s t h e same when s t a n d a r d i z e d f o r o c c u p a t i o n , and lower f o r women when o c c u p a t i o n i s e x c l u d e d from t h e i n d e p e n d e n t v a r i a b l e s . P r e l i s l i n a r y r e s u l t s of a c o r r e s p o n d i n g s u r v e y c o n d u c t e d i n 1980 by a team i n c l u d i n g t h e a u t h o r s f a v o r - t h e l a r r t e r i n t e r p r e t a t i o n : t h e a t t r i t i o n r a t e of s a n u f a c t u r i n g ~ p l o y e e s o v e r t h e d e c a d e aas ~ n l y s l i g h t l y h i g h e r f o r vomen t h a n fmr n e n and t h e a v e r a g e l e n g t h of f e m a l e employment e x p e r i e n c e doubled t o 8.8 y e a r s . i n s t a n c e , Oaxaca e s t i m a t e d t h a t t h e p r o p o k t i o n of G a t t r i b u t a b l e t o s e x d i s c r i s i n a t i o n was 74 p e r c e n t f o r w h i t e s and 92 p e r c e n t f o r b l a c k s ( 5 4 and A5 percent respectively including occupation)./l - The p r e s u m p t i o n t h a t development c a n be e x p e c t e d t o b r i n g changes i n a t t i t u d e s and i n s t i t u t i o n s which d i m i n i s h a r b i t r a r y -!. s a d v a n t a g e s i n f l i c t e d on women by s e x d i s c r i s i n a - t i o n i n t h e l a b o r m a r k e t i s n o t borne o u t . (ii) D i s c r i m i n a t i o n by Bace .Uthough non-Africans ( A s i a n s ) r e c e i v e t h r e e t i n e s t h e pay o f Africans (%), and much of t h e d i f f e r e n c e i s t o be e x p l a i n e d i n t e r d s of t h e i r s u p e r i o r endowment of economic c h a r a c t e r i s t i c s , non-.i£ricans neverthe- l e s s r e t a i n a premium of 8 0 p e r c e n t i n t h k r e g r e s s i o n e q u a t i o n ( 8 ) . The d i s c r i n i n a t i o n a n a l y s i s shows e d u c a t i o n a*d o c c u p a t i o n t o be o v e r w h e l m i n ~ l y r e s p o n s i b l e f o r E ( n o n - A f r i c a n s a v e r a g e 8l.3 y e a r s of s c h o o l i n g and A f r i c a n s 3.6; 58 p e r c e n t of non-Africans and 11 peFcent of A f r i c a n s a r e i n ncn-nancsl jobs). 'levertheless, when t h e A f r i c a n wa$e s t r u c t u r e i s u s e d , ,9 i s Found t o b e 69 ( w i t h t h e o c c u p a t i o n v a r i a b l e s i h c l n d e d i n t h e r e g r e s s i o n s ) o r 78 I ( w i t h o c c u p a t i o n e x c l u d e d ) p e r c e n t of G . i h h e n e s t i n a t e d f r o n t h e l e s s ? non-African wage s t r u c t u r e , + h e r e l a t i v e c o n t r i b u t i o n of R i s reliable/- much s m a l l e r b u t t h e a b s o l u t e s i z e of R r e m a i n s v e r y l a r g e i n r e l a t i o n t o t h e mean wage of A f r i c a n s . A p p l i c a t i o n olf t h e n o n - u - r i c a n occupational , a t t a i n m e n t f u n c t i o n t o A f r i c a n s i n o r d e r t o o b t a i n a n e s t h a t e of t h e A f r i c a n o c c u p a t i o n a l d i s t r i b u t i o n i n t h e a b s e n c e of j o b d i s c r i m i n e t i o n I i n d i c a t e s t h a t j o b d i s c r i m i n a t i o n c a n accloun,: a t t h e n o s t f o r 11 p e r c e n t of - 1/ Oa.xaca ( 1 9 7 3 ) , pp. 146-7. - 2/ - Being based on o n l y 8 . 5 p e r c e n t of t h e sample and s e n s i t i v e t o a number of n o n - s i g n i f i c a n t c o e f f i c i e n t s .  ~ .-/ 1Wage d i s c r i m i n a t i o n by r a c e i s n o r e i n p o r t a n t t h a n job d i s c r i m i n a t i o n . I n T a n z a n i a a minorit.., o s t e n s i b l y w i t h o u t power, a p p e a r s t o b e t h e b e n e f i c i a r y of d i s c r i m i n a t o r y p r a c t i c e s . I s i t p o s s i b l e t h a t unmeasured d i f f e r e n c e s i n p r o d u c t i v i t y , and n o t d i s c r i m i n a t i o n , a r e r e s p o n s i b l e f o r X? These c i g h t stem frcm d i f f e r e n c e s i n t h e q u a l i t y o f e d u c a t i o n o r i n c u l t u r a l l y influenced productive characteristics. h t e s t of t h e couipeting h y p o t h e s e s i s available. i. c z r k e d l y h i g h s r p r o p o r t i o n of p a r e n t s of A s i a n w o r k e r s a r e e d u c a t e d and work i n w h i t e c o l l a r o c c u p a t i o n s . Any a d v a n t a g e t o A s i a n w o r k e r s c o n f e r r e d by t h i s d i f f 2 r e n c e i n f a n i l y background i s more l i k e l y t o be r e f l e c t e d i n s u p e r i o r performance i n w h i t e c o l l a r t h a n i n rnanual o d c u p a t i o t l s : we would e x p e c t t h e c o e f f i c i e n t on t h e r a c e v a r i a b l e t o be h i g h e r i n high- than i n low-level occupations. The n e o - c l a s s i c a l t ' . ~ e o r yo f d i s c r i m i n a t i o n p r e d i c t : t h e opposite relaZionship. The h i g h e r t h e o c c c p a t i o n a l l e v e l , t h e h i g h e r t h e p r o p o r t i o n c h a t A s i a n s c o n s t i t u t e of t o t a l employment. The n o r e abundant t h e p r e f e r r e d group i n a n occupation, t h e l e s s d i s c r i m i n a t o r y a r e t h e i r n a r g i n a l employers, and hence the s m a l l e r t h e average ; ? r h i u m received. E a r n i n g s f u n c t i o n s s t r a t i f i e d by o c c u p a t i o n s u p p o r t t h e d i s c r i m i n a t i o n hypothesis: t h e y show a c l e a r n e g a t i v e r e l a t i o n s h i p between t h e c o e f f i c i e n t o n tlie dummy v a r i a b l e r e p r e s e r t i n g non-African r x e and o c c u p a t i o n a l l e v e l . The premiums r e c e i v e d i n t h e w h i t e c o l l a r , s k i l l e d and s e m i - s k i l l e d occupa- * . I t i o n s a r e 5 7 , 82 a n d 99 p e r c e n t z ' e s p e c t i v e l y . I f non-Africans - a t ? t h e b e ~ e f i c i a r i e sof d i s c r i m i n a t i o n c a n t h e y - b e a s p o w e r l e s s a s t h e y a p p e a i E khen t h e sample i s s t r a t i f i e d by o w n e r s h i p I/ - K n i g h t and S a b o t (1981b1, T a b l e .'I. c a t e g o r y , i t i s f s , ~ : d t h a t t h e r a c e c c e f f i c i e n t i s h i g h e s t f o r t h e g r o u p of " w h o l l y l o c a l and p r i v a t e " f i r n s , t h e ?r2caiun b e i n g 139 p e r c e n t conpared w i t h 5 5 p e r c e n t f o r f o r e i g n p r i v a t e f i m s and 30 p e r c e n t f o r : ' z s t a t a l f i n s ( i n t h i s c a s e partners hi?^ between ; o v e r n n r n t and f o r e i g n f i n s ) . It i s precisely i n t h e l o c a l and p r i v a t e f i m s t h a t A s i a n o w n e r s h i p and c o n t r o l a r e t o b e found. Given t h e v i g o r w i t h v h i c h t h e governments of East A f r i c a have a t t e m p t e d t o r e d r e s s t h e r a c i a l i n e q u i t i e s of t h e c o l o n i a l e r a , we e x p e c t e d t o f i n d t h e r a c i a l v a g e d i f f e r e n t i a l e n t i r e l y a c c o u n t e d f a r by r a c i a l d i f f e r e n c e s i n endokments o f e c o n o a i c c h a r a c t e r i s t i c s . I n s t e a d we found t h a t , a d e c a d e a f t e r I n d e p e n d e n c e , d i s c r i m i n a t i o n by r a c e had n o t d i s a p p e a r e d f r o n t h e l-oor 3 a r k e t i n Tanzania. (iii) S e g n e n t a t i o n by Employee S t a t u s C a s u a l employees a r e h i r e d by t h e d a y , w h e r e a s r e g u l a r employees a r e h i r e d and p a l J by t h e month; o n l y r e g u l a r employees h a v e a measure of j o b s e c u r i t y and p e n s i o n and o t h e r s t a t u t o r y r i g h t s . According t o t h e "compensatory p r i n c i p l e , " competition i n t h e l a b o r m a r k e t s h o u l d e n s u r e t h a t c a s u a l s a r e p a i d more t h a n r e g u l a r e m p 1 o y . e ~ w i t h t h e saine charac- teristics. I n f a c t t h e 9 1 p e r c e n t of t h e sample w i t h r e g u l a r s t a t u s a r e p a i d h a l f a s much a g a i a a s c a s u a l s ( c i a T a b l e 1 ) . Standardizing for , d i f f e r e n c ~ si n c h a r a c t e r i s t i c s o n l y r e d u c e s t h e premium t o a t h i r d ( 8 ) . S e p a r a t e e a r n i n g s f u n c t i o n s f o r r e g u l a r and c a s u a l manual '9 - emp_loyees snow t h k t t h e i r wzge s t r u c t u r e s a r e v e r y d i f f ; r e n t . / l - C a s u a l s - 1/ Zven n o r e s o i f n o n - m n u a l ? a p l o y e e s a r e i n c l u d e d . However, a s c a s u a l employaenc s t a t u s i s c o n f i n e d t o z a n u a l o c c u p a t i o n s , we compare c a s u a l s w i t h r e g u l a r n a n u a l m p l o y e e s i n T a b l e 1. - lla - r e c e i v e s m a l l e r pr-rmiums f o r s u c h economic c h a r a c t e r i s t i . - 3 a s e d u c a t i o n on average they possess i n xotably s i n i l a r and e a p l o y n e n t e x p e r i e n c e , ~ h i c n aeasure. C a s u a l s h a v e 3 . 4 y e a r s o f s c h o o l i n g compared w i t h 3.3 f o r r e g u l a r s a n d , n o s t r m a r k a b l e , c a s u a l s have i . 7 y e a r s of z x p e r i z n c e w i t h t h e c u r r e n t e n p l o y e r compared v i t h 6 . 2 f o r r e g u l a r s . The o n e marked d i f f e r e n c e b e t v e e n c a s u a l s and r e g u l a r s i s o c c u p a t i o n a l d i s t r i b u t i o n : 55 p e r c e n t o f c a s u a l s a r e u n s k i l l e d ; 25 p e r c e n t o f r e g u l a r clanual w o r k e r s a r e u n s ' k i l l e d . A p p l i c a t i o n of t h e t e c h n i q u e s used i n S e c t i o n I ( i i ) s h o w t h a t a t n o s t a t h i r d of G c a n b e e x p l a i n e d i n t e r n s o f p e r s o n a l c h a r a c t e r i s t i c s . Eaployment s t a t u s , u n l i k e s e x and r a c e , i s a n u t a b l e p e r s o n a l c h a r a c t e r i s t i c ; t h e r e i s no b a s i s f o r e m p l o y e r s ' discriminating against individual casual xorkers. lnhy t h e n , i s t h e l a b o r m a r k e t s e g n e n t e d i n f a v o r of r e g u l a r workers? R e c e n t s t i ~ d i e sh a v e shown a s h a r p e a r n i n g s c l i f f i n T a n z a n i a b e t v e e n t h e u r b a n " f o r m a l " s e c t o r and t h e " f r e e e n c r y i n f o n a l " s e c t o r s i n r u r a l a n d u r b a n a r e a s , t h e r e s u l t i n p a r t o f a i n i n u n wages o f f o m a l s e c t o r w o r k e r s b e i n g above t h e c o m p e t i t i v e l e v e l . 1- 1 The s e g ~ e n t a t i o n w i t h i n t h e f o r n a l s e c t o r a n a l y z e d h e r e had i t s r o o t s i n t h e s a e i n s t i t u t i o n a l intervention. B e c a u s e c a s u a l s had no a p l o y a e n t s e c u r i t y o r o t h e r s t a t u t o r y r i g h t s , r e c o r d s o f c a s u a l employees c o u l d be d i s p e n s e d w i t h . .Although wage , l e g i s l a t i o n d i d e x t e n d t o d a i l y p a i d v o r k e r s , i t was p o s s i b l e f o r z n p l o y e r s , , / & by h i r i n g e f f e c t i v e l y permanent l a b o r o n d a i l y c o n t r a c t s , t o e v a d e t h e l e g a l m i n h u n a n d t o p a y a wage c l o s e r t o t h e n a r k e t r a t e . No f e w e r t h a n L 11 For i n s t a n c e , Sabot ( 1 9 i 9 ) , chs. 2, 8; C o l l i e r ( 1 9 i 9 ) . ' 21 - Only f i v e Eirms were r e s p o n s i j l e f o r t w o - t h i r d s o f t h e c a s u a l ~ s a p l o y e e s found i n t h e sample. 60 p e r c e n t of t h e c a s u a l m p l o y e e s r e p o r t e d wages below t h e r e l e v a n t a i n i n u a wage. S e v e r t h e l e s s , t h e remarkable s t a b i l i t y of c a s u a l worksrs s u g g e s t s t h a t t h e j o b s t h e y were i n o f f e r e d b e t t e r tens t h a n any o t h e r s available. (iv) Segmentation .bong T i m s T h e r e a r e l a r g e d i f f e r e n c e s i n a v e r a g e wages anong t h e f i m s i n o u r sample. Even a s i m p l e c o m p a r i s o n o f a v e r a g e wages and a v e r a g e y e a r s of s c h o o l i n g of enployees i n t h e v a r i o u s f i n s ( T a b l e 2) s u g g 2 s t s t h a t compositional differences a r e h p o r t a n t : the carrelation coefficient i s 0.67. To i s o l a t e t h e i n d e p e n d e n t h p a c t o f f i r s a f f i l i a t i o n on wages we added t o t h e e a r n i n g s f u n c t i o n dunmy v a r i a b l e s r g p r e s e n t i n g t h e f i m s i n v h i c h t h e w o r k e r s o f t h e sample a r e a p l o y e d . The c o e f f i c i e n t s o n e a c h o f t h e s e dummy v a r i a b l e s a r e l i s t e d i n t h e t h i r d column o f T a b l e 2 ; t h e b a s e s u b - c a t e g o r y r e p r e s e n t s t h e r e m a i n i n g 23 f i m s w i t h f e w e r t h a n 50 employees. Xost of t h e c o e f f i c i e n t s ( 1 4 o u t of 2 4 ) a r e s i g n i f i c a n t a t l e a s t a t the f i v e percent l e v e l , suggesting t h a t , even afLer controlling f o r d i f f e r e n c e s anong w o r k e r s i n p e r s o n a l c h a r a c t e r i ; : i c s , f i r s affiliation continues t o matter. I n d e e d t o some w o r k e r s i t m a t t e r s a g r e a t d e a l ; a n employee i n f i m 4 w i t h t h e same c h a r a c t e r s t i c s a s a n o t h e r i n f i n 16 n s v e r t h e l e s s e a r n s more t h a n d o u b l e . / - l Sow i s t h e i n f l u e n c e o f f i r m a f f i l i a t i o n t o be explained? l m p l i c H t i n t h e o r i e s of wage d e t e r m i n a t i o n t h a t e m p h a s i z e g r o u p .a - i - a f f i l i a t i o n i s t h e a s s m p t i o n of l a b o r n a r k e t h p e r f e - t i o n s . Non-aarket b - - 1/ 3 e c a u s e a dummy v a r i a b l e i s d i c h o t o m o u s , i t s c o e f f i c i e n t i n a s e a i - logarithmic equation understates the percentage increase i n the d e p e n d e n t v a r i a b l e ( s e e X a l v o r s e n and ? a l n q u i s t , 1 9 8 0 ) .  Table 2 -4VERAGE WAGES .tW E A R S OF SCXOOLING 3 Y FIiCY, XM) THE COEFFICIENTS O N THE FIX3 D W VXRLIBLES Average Average Years C o e f f i c i e n t on t h e Ti rs Wage of S c h o o l i n g Firm Dummy V a r i a b l e / l * Coefficient s i g n i f i c a n t a t l e a s t a t t h e f i v e percent l e v e l . L 1/ The s u b c a t e g o r y of 23 s m a l l f irns - is t h e base i n t h e s d y 'variable analysis. r ' - Xote: T h i s acd t h e two subsequent t a b l e s a r e d?awn from L y i g h t and Sabot ( 1 9 8 1 ~ ) . The t a b l e i s based on r o g r e s s b n s e t 9. . It h f o r c e s which, d i r e c t l y o r b y r e s t r i c t i ? ! l a b o r a o b i l i t y , c a u s e wages t o d e p a r t frcm t h e c o m p e t i t i v e l e v e l , c u s t b e s u f f i c i e s t l y ? o ~ e r f u lt o p r e v e n t c o n p e t i t i o n i n t h e n a r h t f r o n eroding vage d i f f e r e n t i a l s a m o ~ g homogeneous - m r k e r s . E x p l a n a t i o n s f o r p e r s i s t e n t i n t e r - f in d i f f e r e n t i a l s f o r a p p a r e n t l y homogeneous l a b o r d i v i d e i n t o t T a c a t e g o r i e s . On o n e v i e w , e m p l o y e r s a r e f o r c e d 5 y e m p l o y e e s t o r a i s e %ages above t h e c o m p e t i t i v e l e v e l : uages a r e seen a s t h e outcone of a process of c o l l e c t i v e b a r g a i n i r q . On t h t j v i e w , more u n i o n i z e d f i r m s dl1 p a y h i g h e r mopes t h a n l e s s u n i o n i z e d f i r n s ; t h e g r e a t e r t h e f i r n ' s " a b i l i t y t o pay" t h e h i g h e r . a g e s w i l l b e . . b o n g i n d i c a t o r s o f a b i l i t y t o pay a r e c u r r e 2 t p r o f i t s and p r o x i e s f o r long-run p r o f i t a b i l i t y such a s s i z e ( i f g r e a t e r s i z e is associated with e c o n o m i e s o f s c a l e and s o n o p o l y - , o = r ) and c a p i t a l - i n t e n s i t y (essentially b e c a u s e h i g h e r Gages i n v o l v e l e s s c o s t t o x o r ? c a p i t a l - i n t e n s i v e f i n s ) . On t h e o t h e r v i e w , e r c p l o y e r s h a v e r e a s o n t o t a h t h e i n i t i a t i v e i n r a i s i n g wages e i t h e r b e c a u s e o f c e r t a i n non-produc t i v i t y b e n e f 'L t o~ r because productivity m u l d i t s e l f b e r a i s e d . I t i s commonly a r g u e d t h a t f o r e b n f i r a s pay s o r e t h a n l o c a l f i r n s . / l S i u l t i n a t i o n a l s nay s e e the payment o f h i g h m g e s a s a form o f i n s ~ * a n c i en a h o s t i l e e n v i r o n m e n t . / 2 H o s t g o v e r n m e n t s s a y c h o o s e n o t t o d i s c o u r a g e s u c h wage p r e m i u n s i f t h e y r e g a r d h i g h e r wages a s a ineans o f w r e s t i d from f o r e i g n o m e r s a l a r g e r 'Z - 1/ S e e X r r i g ' n i ( 1 9 7 3 ) , Reuber ( 1 9 7 3 ) , lhignt (1975), Lin (1377). - - L - 2 1 I t c o u l d be a m y o h ensuring t h e l o y a l t y o f employees, o f avoiding - charges of "exploitation," and o f r e d u c i q ~ o l i t i c a l jrsssures for ! C L cationalization.  - Both t h e " e f f i c i e n c y wage" and " l a b o r n a t i o n a l s h a r e of v a l u e a d d e d . 1 1 t u r n o v e r " t h e o r i e s o f wage d z t e r s i n a t i o n p r o v i d e r e a s o n s why f i m s a a y t a k e :he i n i t i a t i v e i n r a i s i n g pay; f i m s n a y d i f f e r i n t h e e x t e n t t o w h i c h t h e y would b e n e f i t f r o a r e l a t i c n s h i p s s u c h a s t h e s e . To a s s e s s t h e s e h y p o t h e s e s - w e s u b s t i t u t e v a r i a b l e s r e p r e s e n t i n g t h e r e l s v a n t c h a r a c t e r i s t i c s of t h e l a r g e f i m s i n our s a p l s f o r t h e f i n dumy variables. I n d o i n g s o w e e n c o u n t e r a problem of s u l t i - c o l l i n e a r i t y . T h i s i s n o t o n l y due t o t h e s m a l l nunber of f i n s i n t h e sample: sone c l u s t e r i n g o f f i m c h a r a c t e r i s t i c s i s l i k e l y t o 3e e n d o g e n o u s . Indeed, t h e r e a r e c i r c u m s t a n c e s i n which s t a n d a r d i z a t i o n f o r o t h e r f i n c h a r s c t e - r i s t l c s may b e n i s i e a d i n g . F o r instance, t h e e c o n o n i c q u e s t i o n i s n o t v h e t h e r f o r e i g n f i r v s pay m o t s b u t w h e t h e r , i f t h e y d o , t h e y d o s o b e c a u s e they a r e foreign. If foreign enterprises are nore capttal-intensive, s t a n d a r d i z a t i o n s h c u l d l o g i c a l l y be performed o n l y o n t h a t p a r t of t h e d i f f e r e n c e i n c a p i t a l i n t e n s i t y which i s i n d e p e n d e n t o f o w n e r s h i p s t a t u s . ;Uthough o u r r e s u l t s o n t h e i n f l u e n c e of p a r t i c u l a r f i k a c h a r a c t e r i s t i c s nust be qualified f o r these reasons, they reveal a coherent story cocsistent w i t h t h e i n s t i t u t i o n a l s e t t i n g i n Tanzania. The d i f f e r e n c e s i n c h a r a c t e r i s t i c s b e t v e e n f o r e i g n a n d l o c a l . , p r i v a t e e n t e r p r i s e s c o r r e g p o n d t o t h e c a r i c a t u r e o f ~ u l t i n a t i o n a lf i m s i n developing countries. The f o r e i g n f i r m s h a v e t w i c e t h e v a l u e a d d e d , t h r e e 11 - T h i s h y p o t h e s i s i s n o t i n d e p e n d e n t o f t h e a b i l i t y t o pay h y p o t h e s i s : t h e a u l t i n a t i o n a l s n u s t h a v e t h e r e s o u r c e s t o p a y h5gh ;rages. Xcwever, i t i s o f t e n a s s e r t e d t h a t m u l t i n a t i o n a l o p e r a t i o n s jp l e s s d e v e l o p e d ccun:rLes t e n d t o b e h i g h l y p r o f i t a b l e , as a r e s u l t - o f t h e i r n o n o p o l y o r collusive oligopoly positions. tines the capital-intensity, a n d 40 p e r c e n t h i g h e r l a b o r p r o d u c t i v i t y ; L-re I t n o t f o r t h e e x t r a o r d i n a r i l y poor p e r f o m a n c e of o n e , loss-ma:dng, e n t e r p r i s e , t h e s u l t i n a t i o n a l s - a u l d b e n o r + p r o f i t a k l e t h a n l o c a l f i n s ./l X l t h o q h f o r e i g n f i m s h a v e a'reatet: " a b i l i t y t o p a y , " t h e d m n y v a r i a b l e s s i g n i f y i n g ownership s q g e s t t h a t t h e y d o n o t pay n o r e : r e l a t i v e t o l o c a l p r i v a t e f i m s ( t h e b a s e sub-category) f o r e i g n ownership i a v o l v e s a prenirsn of o n l y 6 percent (Table 3 ) .A/ The w g 2 s t r u c t u r e of f o r e i g n f i n s , however, a p p e a r s t o S e e c o n o m i c a l l y more r a t i o n a l t h a n t h a t of l o c a l f i r m s . %en t h e e a r n i n g s f m c t i o n s a r e s t r a t i f i e d by f i r m o b n e r s h i p c a t e g o r y , t h e c o e f f i c i e n t s on t h e v a r i a b l e s representing personal productivity -- e d u c a t i o n and e n p l o y u e n t experience -- a r e h i g h e r i n f o r e i g n f i r m s , .*hereas t h e i n f l u e n c e of p e r s o n a l v a r i a b l e s Ghich might b e i n t e r p r e t e d a s p r o x i e s f o r a m r b r ' s "social station" -- a g e and r a c e -- i s g r e a t e r i n l o c a l f i n s (Table 4 ) . The sample c o n t a i n s f i v e p a r a s t a t a l e n t a r p r i s e s , i .e., "partly zovernment owned and p a r t l y f o r e i g n f ' f i m s . I n 1968 g o t r e r m e n t l a i d down common b a s i c pay s c a l e s f o r a l l p a r a s t a t a l enployeies, a s p a r t of i t s attempt t o r e s t r a i n wages./i '/k w u l d t h e r e f o r e e x p e c t 1 t h e c o e f f i c i e n t on t h e p a r a s t a t a l dumny v a r i a b L e t o b e n e g a t t v e . On t h e c o n t r a r y , i t i s p o s i t i v e a n d , a t 19 p e r c e n t , l a r g e r even t h a t f o r fcreign-owned companies! s t 1/ Ir: p a r t c h e s e d i f r ' e r e n c e s may r e f l e c t d i f f e r e n c e s i n t h e c o m p o s i t i o n o f - p r o d u c ti.,&, v i t h f o r e i g n f i r m s d i s p r o p o r t i o n a t e l y f e p r e s e n t e d i n e . J . . - m o t o r as%embly and c h e m i c a l p r o d u c t s The c o e & i c i e n t , which i s n o t s i g n i f i c a n t , m Q h t b e g r e a t e r w r 2 i t n o t - 2/ f o r t h e m g e d i s c r i m i n a t i o n i n f a v o r of A s i a n s i n l o c a l p r i v a t e f i ~ s r e p o r t e d above. - 3/ T h r o q h t h e S t a n d i n g Committee on D a r a s t a t a l O r g a n i a t i o n s ( S C O P 0 ) - . See Jaclffion ( 1 9 7 9 ) . P r i v a t e f i n s ; e r e n o t s u b j e c t t o e q u i v a l e n t r % u l a t i o n .  Table 3 EARXINGS FUNCTIONS FOR THE LAXGEFLXY SAYPLE COMBUIXG PEEZSONAL X,W FliLY V.ULU3US I n d e p e n d e n t Firm V a r i a b l e 1 1 Coefficients (a> (b Foreign privace firms/L 0.058 Part-local, part-foreign private firms/L 0.095 Part-government, part foreign f i r m 1 2 - 0.167* Propor t i o n of w o r k e r s u n i o n i z e d to. 765* -0.107 Firn size: 80 o r more employees/2_ 0.118* 0.121** P r o p o r t i o n of w o r k e r s u n s k i l l e d o r s e m i s k i l l e d -0.995** -0.791** P r o f i t s a s a p e r c e n t a g e of c o s t s 0.020 0.091** Capital -- l a b o r ratio 0.000 0.000 - 11 The r e g r e s s i o n w a s e s t i m a t e d u s i n g p e r s o n a l a s well1 a s f i r s v a r i a b l e s , but o n l y t h e c o e f f i c i e n t s o f t h e l a t t e r a r e r e p o r t e d h e r e . The t a b l e i s b a s e d on r e g r e s s i o n s e t C. - 21 h e b a s e s u b c a t e g o r i e s of and f i r m s i z e 50-79 the dumy variables ark p r i v a t e l o c a l firms employees. - 31 Although t h e nuober of o b s e r v a t i o n % , c o r r e s p o n d i n g t o t h e number o f employees i n t h e 2 4 l a r g e f i r m s , is 628, t h e numbkr of v a i ~ e staken b y t h e f i n c h a r a c t e r i s t i c s i s 24. The a p p r o p r i a t e t e s t s of s i g n i f i c a n c e f o r t h e f i n c h a r a c t e r i s t i c s a r e G c l s a r ; t h e a s z e r i s k s a r e based on the nomal test. !e - * I n d i c a t e s i n t h i s , and i n s u b s e q u e c t t a b l e s t h a t t h e coefficient i s s i g n i f i c a n t a t the f i v e p e r c e n t l e v e l . ** I n d i c a t e s i n t h i s , and i n s ~ b s e q u e n tt a b l e s , t h a t t h e c o e f f i c i e n t i s s i g n i f i c a n t a t t h e one p e r c e n t l e v e l .  7. - Table 4 EARNINGS FL3CTIONS FOR EYPLOYEES OF FOREIGN -L\jD LOCAL PRIVATE SIRYS Independent Variables Coefficients Foreign Local Years of education 0.043** 0.027** Years o f c u r r e n t employment 0.040** 0. OLO* Y e a r s o f p r e v i o u s employnent 0.022** 0. Oil** Age 15 - 19 Age 20 - 34 Age 35 - 49 African race -0.522"" -0.814** C o n s t a n t term -20.8 -55.3 Xumber of o b s e r v a t i o n s NOTES: Sot a l l the independent v a r i a b l e s included i n the equation a r e reported i n t h e t a b l e . The base s u b - c a t e g o r i e s o f t h e dummy v a g i a b l e s a r e age 50+ and Yon-African race. The t a b l e is based on r e g r e s s i o n set. C. . I T h e m o s t p l a u s i b l e e x p l a n a t i o n i s s u g g e s t e d by t h e p a t t e r n o f n a t i o n a l i z a t i o n i n Tanzania. The p a r a s t a t a l s e r e n o r e c a p i t a l - i a t e n s i v e , l a r g e r and n o r e p r o f i t a b l e than f o r e i g n f i n s . It i s l i l e l y t h a t t h o s a - e r s t h e c h a r a c t e - r i s t i c s t h a t inade t h e s e f o m e r l y f o r e i g n f i n s t h e f i k s t t a r g e t s f o r s t a t e participation. Althollgh i n 1 9 7 1 t h e 1 9 6 8 SCOPO s c a l e s a p p l i e d t o r e c r u i t s , many p a r a s t a t a l s n p l o y e r s r e t a i n e d t h e i r f o r m e r b a s i c ? a y l e v e l s o n a personal basis. L h i l e n o t a l l E o r a Q n f i r m s p a y n o r e , t h e f i n d i n g on p a r a s t a t a l s s u g g e s t s t h a t t h o s e w f t h t h e g r e a t e s t a b i l i t y co p a y d i d ? a y a prmium. U n i o n s i n d e v e l o p i n g c o u n t r i e s s a y l a c k f i n a n c i a l and p o l i i z i c a l , nd 3 e w a ' k n e d b y a n abundance o f l a b o r . ? o ~ r a I n d e e d , .here g o v e r n n e n t c l a s h e s w i t h t h e u n i o n s , s u b o r d i n a ~ e sthem, 2nd s a l e s thern i n s t r m e n t s o f g o v e r n m e n t p o l i c y , a n d &ere t h a t p o l i c y i s o n e o f Gage r e s t z a i n t , a n i o n s may e v e n b e e f f e c t i v e i n d e p r e s s i n g wages. The r o l e o f e r a d e u n i o n s i n T a n z a n i a i s b e t t e r d e p i c t e d by t h e "government c o n t r o l " t h a n b y t h a " c o u n t e r v a i l i n g poker" n o d e l . / l The g o v e r n m e n t adopced a series o f z e a s u r e s d u r i n g t h e 1 9 6 0 s which e f f e c t i v e l y s c b o r d i n a t e d l a i o n a i m t o i t s o m a n d s e v e r e l y r e s t r i c t e d t h e r i g h t s t o stri!e and t o 2 ~ 3 % ~ i n. f r e e c o l l e c t i v e bargaining. The s o l e t r a d e u n i o n m s a f f i l i a t e d t o t h e r l d i n g p o l i t i c a l par,ty ! T W ) a n d e n j o i n e d " t o do e v e r y t h i d i n i t s p o k e r t o p r o n o t e t h e p o l i c i e s o f TXUU" * i c h a f t e r 1 9 6 7 inc1r;ded a n incomes p o l i c y i n t e n d e d t o r e s t r a i n t h e g r o m h o f uages. Tl . - ec h o s e a s o u r p r o x y f o r u n i o n s t r e q t h t % e p r o p o r t i o n o f e m p l o y e e s i n t h e f i m &o .*ere u n i o n i z e d . .As t h e d e g r e e of u n i o n i z a t i o n ms g e n e r a l l y - 1 ? o r d e t a i l e d a c c o u n t s s e e Z r i e d l a n d ( 1 9 6 9 ) and ;ac!cson (1979).  h i g h and i t s r a n g e among f i n s n a r r o w , i t c a a e a s a s u r 2 r i s e t h a t t h e u n i o n i - z a t i o n v a r i a b l e produced a d e c i s i v e r e s u l t . The c o e f f i c i e n t i s n e g a c i v e a s p r e d i c t e d by t h e " g o v e r m e n t c o n t r o l " h y p o t h e s i s , and s i ~ n l f i c a n t l ys o ( r e g r e s s i o n a is T a b l e 3 ) . / 1- The v a l u e o f tllz c o e f f i c i e n t b p l i e s t h a t a r i s e i n t h e p r o p o r t i o n of employees u n i o n i z e d by 1 0 p e r c e n t a g e p o i n t s would r e d u c e - pay by 7 p e r c e n t . / 2 C o u n t e r v a i l i n g power n o d e l s of waze d e t e r m i s a t i o n s u g g e s t s t h a t p r o x i e s f o r " a b i l i t y t o pay" a r e l i k e l y t o prove good i n d i c a t o r s o f a f i r n " s wage l e v e l . But i f t h e r e i s no upvard p r e s s u r e on wages from t h e i r w o r k e r s , t h e r e i s a o r e a s o n why f i m s a b l e t o pay n o r e s h o b l d do s o u n l e s s t h e y wou!Ld themselves b e n e f i t . I t would be c o n s i s t e n t w i t h o u r view, t h e r e f o r e , i f t h e p r o x i e s were n o t s t a t i s t i c a l l y s i g n i f i c a n t . . ase I n d e e d , t h i s proved t o be t h ~ c f o r two o f t h e p r o x i e s we used: c a p i t a l - i n t e n s i t y , and p r o f i c s a s a p r o ? o r t i o n of t o t a l c o s t ( T a b l e 3 , r e g r e s s i o n a ) . However, when t h e f i n ownership a u s m i e s a r e dropped from t h e e q u a t i o n ( r c g r e s i o n b ) , t h e ' c o e f f i c i e n t on 2 r o f i t s a s a p r o p o r t i o n of c o s t s becclnes s i g n i f i c a n t l y p o s i t i d e , r e f l e c t i n g t h e c o r r e l a t l o n (+0.489) between p r o f i t s and t h e h i g h e s t paying o w n e r s h i p c a t e g o r y . This s u g g e s t s t h a t i t i s t h o s e f i n s which have b o t h t h e means and t h e n o t i v e t o pay s o r e -- t h e most p r o f i t a b l e f o r e i g n f i r i n s , which were i n c l u d e d i n o u r p a r a s t a t a l category - that do so. 2 '9 - 1/ A s i m i l a r r e s u l t i s o b t a i n e d when u n i o n i z a t i b n i s i n c l u d e d a s a p e r s o n a l variable. li - . L - 2/ X e c a l l , however, t h e d i s c u s s i o n o f c o l l i n e a r i t y m o n g t h e f i n v a r i a b l e s . S Unionization i s correlated negatively t o foreign oknership status- I ( r = - 0 . 3 4 ) ) t o t h e p r o p o r t i o n of ~ n s k i l l e dand s e m i - s k i l l e d e m p l B p e n t i n t h e t o t a l ( - 0 . 3 9 ) , and t o f i r m s i z e (-.2g1), and p o s i c i v e l y t o b a r a s t a i a l s t a t u s (0.48). The c o e f f i c i e n t remains n e g a ' t i v e b u t i s no l o n g e r s i g n i - f i c a n t when t h e f i r m o w n e r s h i p v a r i a b l e s a r d dropped from t h e e q u a c l o n (regression b).  T.;le r e l a t i o n b e t w e e n wages and f i r m - s i z e i s ambigucus. Tlae con- v e n t i o n a l v i e w i s t h a t l a r g e f i n s pay n o r ? t h a n s m a l l f i r n s . The r e a s c 2 s f o r e x p e c t i n g t h i s posi:ive r e i a t i o n a??ly x i t h i n sub-sectors and only in- c i d e n t a l l y t o t h e a a n u f a c t u r i n g s e c t o r . a s a whole. !;hen f i n s i z e :;as e n t e r e d a s a c o n t i n u o u s v a r i a b l e , c h e c o e f f i c i e n t Gias n e g l i g i b l e ant! insignificant. d s e a r c h f o r a non-linear r e l a t i o n s h i p u s i n g d u m ~ yv a r i a b l e s s u g g e s t e d a d i s t i n c t i o n b e t w e e n t h o s e f i m s r i t h 50-79 e n p l o y e e s a n d t h o s e with 80 o r nore: wages i n t h e l a r g e r f i m s a r e 13 p e r c e n t h i g h e r . Further d i s a g g r e g a t i o n w i t h i n t h e above-SO c a t s g o r y f a i l e d t o r e v e a l s u c c e s s i v e wage i n c r e n e n t s w i t h i n c r e a s i n g f i r n s i z e . h r L h e r v a r i a b l e , t h e p r o p o r t i o n o f e m p l o y e e s i n t h e f i n vho a r e i n unskilled o r semi-skilled o c c u p a t i o n s , was a l s o i n c l u d e d a s a n i n d i c a t o r of a b i l i t y t o pay. The h y p o t h e s i s % a s t h a t f i r i r s w i t h a h i g h p r o p o r i i o n o f r e l a t i v e l y u n s k i l l e d l a b o r would a t t e m p t t o k e e p down wages i n t h e s e occupa- tions; i n f a c t the coefficient f o r the f u l l s a p l e is strongly negative. %e c a n o n l y s p e c u l a t e on t h e e x p l a n a t i o n . Years a&o S l i c h t e r found t h a t t h e u n s k i l l e d wage i n t h e U.S. tended t o be h i g h i n i n d u s t r i s s where t h e s e n i - s ' k i l l e d a n d s k i l l e d wage w a s a l s o h i g h , a n d v n e r e v a g e c o s t s v e r e low a n d - He a t t r i b u t e s these r e s u l t s t o the p r o f i t s high i n r e l a t i o n t o sales./l orces. i n f l u e n c e o f a a n a g e r i a l p o l i c y a s opposed t o ma 1 ~ f t Correspondingly, . , i t i s p o s s i b l e t h a t i n T a n z a n i a a h i g h p r o p o r t i o n of u n s k i l l e d and s m i - s k i l l e d ? - - l a b o r c a u s e s f i r m s t o keep t h e s e vages low, and t h a t i n t s r n a l l a b o r inarket c o n s i d e r a t i o n s t h e n ' s c c o u n t f o r t h e low wages a l s o f o u n d a t t h e h i g h e r occupational l e v e l sT ! e - - 1/ S l i c h t e r ( 1 9 5 9 ) . - (v) D i s c r i n i n a t i o n , S e g m e n t a t i o n , and t h e I n e q u a l i t y o f Pay We now s h i f t otlr f o c u s f r o n t h e s t r u c t u r e of e a r n i n g s ts t h e i n - e q u a l i c y o f pay. T h e r e i s no f i x e d r e l a t i o n s h i p between t h e e x t e n t t o x h i c h t h e e a r n i n g s o f i n d i v i d u a l s c r g r o u p s a r e i n f l u e n c e d by d i s c r i z i i n a t i o n o r s e g m e n t a t i o n and t h e c o n t r i b u t i c . ~of t h e s e phenomena t o t h e t o t a l d i s p e r s i o c of s a r n i n z s . Our p r o c e d u r e f o r a s s e s s i n g t h e c o n t r i b u t i o n t a d e by t h e d i s - c r i m i n a t i o n and s e g m e n t a t i o n v a r i a b l e s t o t h e t o t a l d i s p e r s i o n of l o g . e a r n i n g s (w) was a s f o l l o w s . We estimate an earnings function using the f u l l s e t o f i n d e p e n d e n t v a r i a b l e s ; by n e a n s o f t h i s f u n c t i o n sre t h e n e s t i m a t e d t h e predicted earnings (6) o f each enployee. The c o e f f i c i e n t o n e a c h i n d e p e n d e n t v a r i a b l e ( i ) i n t u r n was s e t e q u a l t o z e r o , and t h e p r e d i c t e d e a r n i n g s (wi) were e s t i m a t e d u s i n g t h e h y p o t h e t i c a l f u n c t i o n . The v a r i a n c e s A o f w , $ a n d w i v e r e c a l c u l a t e d , /- l and t h e c a n t r i b u t i o n of i t o t h e e x p l a i n e d v a r i a n c e of e a r n i n g s was e s t i m a t e d a s ( v a r ( w ) A - A var(wi)). The r e l a t i v e con- t r i b u t i o n of e a c h i n d e p e n d e n t v a r i a b l e was c a l c u l a t e d by e x p r e s s i n g i t s c o n t r i t u t i o n a s a percentage of i (var(w) A - var(hv,)). .. I n e f f e c t we a r e a t t e m p t i n g t o answer t h e f o l l o w i n g c o u n t e r f a c t u a l q u e s t i o n : What would b e t h e i m p a c t on t h e i n e q u a l i t y o f pay i f , w h i l e o e a n e a r n i n g s were h e l d c o n s t a n t , / Z t h e d i s p e r s i o n due t o a p a r t i c u l a r c h a r a c t e r i s t i c o r g r o u p o f * . L c h a r a c t e r i s t i c s of workers o r f i n s v e r e eliminated? - 21 - Setting E ,a c o e f f i c i e n t e q u a l t o z e r o i s i d e n t i c a l , i n i t s e f f a t on t h e v a r i a n c e , t o s e t t i n g t h e v a l u e of a n independent v a r i a b l d f o r e a c h w o r k e r e q u a l L O t h e z e a n f o r t h e sample; t h e l a t t e r e n s u r e s t h a t t h e rneans o f tii and w a r e i d e n t i c a l .  - 21 - The r e s u l t s f o r s e l e c t e d v a r i a b l e s and g r o u p s o f v a r i a b l e s a r e shown i n T a b l e 5. The f i r s t column ( u s i n g t h e dummy v a r i a b l e s r e p r e s e n t i n g p a r t i c u l a r f i n s r a t h e r t h a n t h e v a r i a b l e s r s p r e s e n t i n g c h a r a c t e r i s t i c s of f i r u s ) shows t h a t r a c e a l o n e a c c o u n t s f o r no l e s s t h a n 20 p e r c e n t o f t h e e x p l a i n e d v a r i a n c e i n l o g . e a r n i n g s whereas t h i e f f e c t of s e x i s n s g l i g i b l z . Employment s t a t u s e x p l a i n s 5 p e r c e n t a n d t h e firm duumies 1 3 p e r c e n t . Thus t h e z e g n e n t a t i o n v a r i a b l e s t o g e t h e r a c c o u n t f o r 18 p e r c e n t , and t h e dis- c r i m i n a t i o n and s e g m e n t a t i o n v a r i a b l e s t o g e t h e r f o r 3 1 p e r c e n t . /- L That l e a v e s 6 2 p e r c e n t o f t h e v a r i a n c e i n p r e d i c t e d e a r n i n g s t o b e e x p l a i c e d by those personal variables that a r e aore l i k e l y t o represent productive characteriscics. A s t h e r e g r e s s i o n e q u a t i o n e x p l a i n s 67 p e r c e n t o f t h e a c t u a l v a r i a n c e of l o g . e a r n i n g s , t h e c o n t r i b u t i o n of each c h a r a c t e r i s t i c t o v a r ( w ) must b e c o r r e s p o n d i n g l y r e d u c e d . The n a i n a f f e c t o f s u b s t i t u t i n g f i r m c h a r a c t e r i s t i c s f o r f i m dummy v a r i a b l e s in t h e r e g r e s s i o n ( c o l m n 2 ) i s t o d e c r e a s e s u b s t a n t i a l l y t h e c o n t r i b u t i o n o f s e g n e n t a t i o n among f i r m s , t h e h p l i c a t i o n b e i n g t h a t c h a r a c t e r i s t i c s o f Eims o t h e r t h a n t h o s e we h a v e m e a s u r e d a l s o h a v e a n L n p a c t o n wages. i n sum, t h o s e p e r s o n a l v a r i a b l e s , l n p a r t i c u l a r r a c e , x h i c h c a n n o t plausibly be regarded a s representing a a i n l y productive c h a r a c t e r i s c i c s , a r e r e s p o n s i b l e f o r a s u b s t a n t i a l p a r t o f t h e i n e q u a l i t y o f pay i n T a n z a n i a . a Whereas t h e wage o f a w o r k e r i s i n d e e d i n f l u e n c e d by t h e f i r m i n which h e i s e m p l o y e d , t h e c o n t r i b u t i o n o f s e g m e n t a t i o n among E i m s t o t h e i n e q u a l i t y o f pay i s v e r y m i n o r . 11 - . G i v e n t h a t e n p l o p e n t e x p e r i e n c e i s a l s o i n c l u d e d among t h e i n d e p e n d e n t v a r i a b l e s , age n i g h t be regarded a s a d i s c r i m i n a t i o n v a r i a b l e . In that c a s e t h e c o n t r i b u t i o n o f d i s c r i i n i n a t i o n i s 2 L p e r c e n t and t h a t o f d i s - c r i m i n a t i o n and s e g m e n t a t i o n t o g e t h e r $ 1 p e r c e n t .  Table 5 RELATIVE CONTRIBUTION OF DISCRI?IINATI@XiLUD SEmE?JTATIO?J V-UIX3LES TO P.E VBXIXIUCE OF LCG MuI?JGS ? r l c e n h S e Clf The Tsta: E x p l a i n z d '!&;lanc+ - & p l a i ~ t d37 Seleczo:! !ra,ri?Sles That Is r-- Using F i r m Using F i r m Dumny V a r i a b l e s i l CSaracteristics/2 Sex Age D i s c r i ~ i n a t i o n( s e x znd r a c e ) 19.6 25 . 3 Employment s t a t u s 5.0 4.9 Firr affiliation S e g n e q t a t i o n (employment s t a t u s and firm a f f i l i a t i o n ) D i s c r i m i n a t i o n and s e g m e n t a t i o n 37.3 34.5 NOTE: Other measures of t h e r e l a t i v e c o n t r i b u t i o n s o f v a r i a b l e s o r g r o u p s o f v a r i a b l e s were a l s o c a l c u l a t e d , i . e . , t h e c o e f f i c i e n t of v a r i a t i o n i n s t e a d of :he v a r i a n c e i n t h e e x e r c i s e above, t h e "main e f f e c t s " i n an a n a l y s i s o f v a r i a n c e , and t h e s q u a r e s o f t h e p a r t c o r r e l a t i o n s ( t h e a b s o l u t e e f f e c t s on X2 of e x c l u d i n g one independent v a r i a b l e a t a time f r o m t h e r e g r e s s i o n ) . The r e s u l t s proved t o be v e r y s i n i l . a r . I 1 * - 1/ 3ased on r e g r e s s i o n s e t a. * - 2/ Based on r e g r e s s i o n s e t C. 11. Human C a p i t a l a n d Competing T a r a d i g x s (i) Post-school S k i l l Acquisition T a b l z 6 p r e s e n t s i n d i c a t o r s of t h e d e g r e e of s t a b 2 l i : y o f t?,e n a n u f a c t u r i n g l a b o r f o r c e i n 1971. The e s t i a a t e d r a t e o f t u r n o v e r , i . e . , t h e number o f c h a n g e s i n m p l o y e e s i n a z i v e n s t o c k o f j o b s , i s r o u g h l y 1 p e r 1 0 0 j o b s p e r s o n t h , c o n s i d e r a b l y Lower t h a n i n 1I.S. a n d 3 r i t f s h - The e s t i n a t e d r a t e of n o b i l i t y , i . e . , nanufacturing./l t h e nunber of j o b changes 5y a g i v e n s t o c k o f emplcgees, i s .I37 p e r y e a r of e m p l ~ p e n t . The r a t e o f v o l u n t a r y s o b i l i t y i s s t i l l l o v e r , .081. These neasures of t h e s t a b i l i t y of t h e n a n u f a c t u r i n g l a b o r f o r c e suggest t h a t post- i n d e p e n d e n c e T a n z a n i a i s c l o s e r t~ t h e J a p a n e s e s o d e l o f l i f e t i x e comnitnene t o t h e f i r m t h a n t h e E a s t A f r i c a n c o l o n i a l n o d e l of a l a b o r f o r c e comprised a l s o s t e n t i r e l y of t a p o r a r y employees. For t h e f i r s t h a l f o f t h e t w e n t i e t h c e n t u r y n i g r a t i o n f o r u a g e employment i n T a n z a n i a was c i r c u l a r and s h o r t - t e r n . Absence from hone was g e n e r a l l y f o r l e s s - t h a n a y e a r and r a r e l y f o r n o r e t h a n t h r e e o r four y e a r s . 1 2 The i n c r e a s e i n employment s t a b i l i t y a n d c o r r e s p o n d i z g i n c r e a s e i n r e s i d e n t i a l s t a b i l i t y o f Tanzania's urban l a b o r f o r c e have occurred i n response t o changes i n i n c e n t i v e s . I n p a r t i c u l a r , changes i n the l e v e l a n d s t r u c t u r e o f wages h a v e m a r k e d l y i n c r e a s e d t h e i c c e n t i v e t o a c c u m u l a t e . L e m p l o y m e ~ te x p e r i e n c e . The c h a n g e s i n i n c e n t i v e s a r e t h e p r o d u c t o f s u c h i s s t i t u t i o n a l i n t e r v e n t i o n s a s t h e s t a t u t o r y n i n h u n wage and o f wage - * ad j u s m e n t s i n i t i a t e d 3 employers. 11 - O f f i c i a l s t a t i s t i c s o o f turnover i n 1971 i n d i c a t e r a t e ? of about G and 2.5 p e r c e n t r e s p e c t i v e l y . 1 / S a b o t ( 1 9 7 9 ) ) c h . 7. -  Table 6 I > I C I C z S OF ~ , ' ~ ? ~ O ~ ! . 3!"~ >3NI L ~ IT?: =;\zxIz>:C" - f JOBS E 3 3 , T U T Y O E 3 ..73 >!03 IlriT'I -- ~ e a r isn C - ~ r r n n t job One TsJo 3.1-5 20.7 Three 13 :lean y e a r s i n c c r r e z i jokl Mean y e a r s i 2 -dacje emp 1olr;ner.t ?!onthly r a t s of t u r n o v e r !ability r a t e s e r ? e r 100 j o b s : * - .v e x or' e.?!gloy,ent :** a (n = 3) 1.06 a. T o t a l 0.137 1 The r a t e o f t n r n o v e r i s 2 s t i n a t e d a s 5 = (:c-y(l+q) - / l 2 n ) x h e r e x i s t h e nunber of x ~ n u f a c t n r i n ge n - y e s s i n 1971, y t h e p l o- number o f . t h ~ s e i n t;h- s a n e j o 3 s n yeiars b e f o r e , a n d - g t:le a n n u a l r z f e / ~ o w t ho f r n n u f a c t u r i n c j employnent. Insofar a s some j o b s e x i s t i n g n y e a r s 5 e f o r e c e a s e d t o e x i s t , f i s overstate2. ** The r a t s cf n o b i l i t y i s e s t i x a t 2 2 a s ;?-= ( j - i ) / l : h e r e I i s l e n g t h of wzge e r n p t o p e n t and j i s nuiir&er C. of jobs h e l 2 . - - When v o l u n t a r y ( o r i n v o l x n t a r y ) n o b i l i t v is 7.easure6, ( j - L ) - e f e r s t o t h e 2unber of v o l t l n t a r y ( o r lzvolun=ar:r) c k a z q s s . ,- *  A s l o n g a s t h e denand was f o r u n s k i l l s d l a b o r , t h e h i g h t u r n o v e r r a t e s i m p l i e d by t h e c o l o n i a l s y s t e n of c i r c u l a r s i g r a t i o n d i d n o t adversely a f f e c t p o f i t a b i l i t y . 3y 1 9 5 5 , h o v e v e r , c o n c e r n v a s e x p r e s s e d i l t h a t a n o d e r n i n d u s t r i a l s e c t o r v o u l a n o t p r o v e e c o n o n i c a l l y v i a b l e If w o r k e r s c o n t i n u s d t o b e s o uncommitted t o t h e i r j o b s t h a t , s o o a a f t e r a c q u i r i n g s k i l l s , t h e y r e t u r n e d t o t h e i r r u r a l a r e a s t o be r e p l a c e d by raw r e c r u i t s . T h i s c o n c e r n s p r e a d a s n o n - a g r i c u l t u r a l wage eaployment grew i n i n p o r t a n c e , a n d i t was a f a c t o r n o t i v a t i n g b o t h g o v e r m e n t and wage p o l i c i e s . ~rivate The s u b s t a n t i a l r i s e i n u r b a n wages r e l a t i v e t o r u r a l iacomes, t h e r e s u l t i n p a r t of t h e i n t r o d u c t i o i n of t h e n i 2 h u n wage i n 1959 and s u b s e q u e n t i n c r e a s e s i n i t s l e v e l , was p e r h a p s t h e p r i n c i ? a l a e a n s by c h i c h t h e system of s h o r t - t e r n - Higher c i r c u l a r m i g r a t i o n % a s eroded.12 u r b a n wages r a i s e d t h e o p p o r t u n i t y c o s t of l e a v i n g u r b a n e n p l o y n e n t f o r s p e l l s o f t e n d i n g t h e f a n i l y s h a n b a , and t h e y nade i t p o s s i b l e f o r migrants to support t h e i r families i n t o m . The r i s e i n v a g e s e v e n t u a l l y g e n e r a t e d an u r b a n l a b o r s u p p l y i n e x c e s s o f denand, s o p r o v i d i n g incum- b e n t s w i t h a g r e a t e r i n c e n t i v e t o h o l d o n t o wage j o b s . iiut t h e r e was a n o t h e r f a c t o r a t work. I n t h e c o l o n i a l p a s t t h e earnings-experience p r o f i l e i n a g r i c u l t u r e , which p r o v i d e d n o s t wage e a p l o y m e n t , and i n L much o f t h e u r b a n s e c t o r v a s t y p i c a l l y h o r i z o n t a l . Changes i n t h e ex- p e r i e n c e s t r u c t u r e o f wages a l s o p l a y e d a n h p o r t a n t r o l e i n s t a b i l i z i n g t h e u r b a n l a b o r f o r c e ; i t i s w i t h t h a t r o l e t h a t we a r e concerned h e r e . . b - 1/ I n t h e Xeport o f t h e E a s t A f r i c a n Xoyal C o n d s s i o n . - 21 S a b o t ( 1 9 7 9 ) , c h s . 7 , 8. I n p a r t i c u l a r o u r f o c u s i s o n t h e i n c e n t i v e s t h a t t h e m a n u f a c t u r i n g wage s t r u c t u r e provides f o r t h e accumulation of enploynent experience. Our f i n d i n g s a r e summarized i n T a b l e 7 which p r e s e n t s c o e f f i - c i e n t s from r e g r e s s i o n s e t D. The l a s t 16 e q u a t i o n s d i f f e r wich r e s p e c t t o t h e m e a s u r e s o f e x p e r i e n c e used and t h e s t r a t a of t h e sainple f o r whicn they a r e estimated. . U n o s t a l l t h e l i t e r a t l l r e which examines t h e r e l a t i o n between s k i l l - f o r n a t i o n and e a r n i n g s u s e s a v a r i a b l e hf t h e f o r n (A-E-6) a s a p r o s y f o r a p l o p e n t e x p e r i e n c e , where h i s t h e a g e o f a w o r k e r and E h i s years of education. Our s u r v e y p r o v i d e s i n f o r n a t i o n n o t o n l y o n t h e a c t u a l n i i b e r of y e a r s o f wage e m p l o p e n t b u t a l s o o n l e n g t h o f e m p l o p e n t i n t h e c u r r e n t j o b and i n p r e v i o u s j o b s ; and we have i n f o m a - t i o n c n t h e e x t e n t of and m o t i v e s f o r i n t e r - f i m m o b i l i t y o f o u r sample. T h i s e v i d e n c e e n a b l e s u s t o a s s e s s h y p o t h e s e s f r e q u e d t l y e x a m i ~ e di n t h e t h e o r y o f wage d e t e r a i l a t i o n b u t r a r e l y a d d r e s s e d i n e n p i r i c a l work. Many o f t h e s k i l l s on which u r b a n employer$ p l a c e d v a l u o were " g e n e r a l " i n t h a t t h e y r a i s e d t h e m a r g i n a l p r o d u c t of w o r k e r s i n a v a r i e t y of non-agricultural e ~ p l o y m e n t s . One s u c h s k i l l was t h e a c q u i - s i t i o n o f " i n d u s t r i a l d i s c i p l i n e " by f a c t o r y z a n u a l Workers. I f skills a r e g e n e r a l , c o m p e t i t i o n among e m p l o y e r s w i l l e n s u r e t h a t t h e wage r a c e r i s e s t o maintain e q u a l i t y with t h e a a r g i n a l product. Secause an . I e m p l o y e r c a n n o t c a p t u r e any o f t h e r e t u r n o n t h e c o s l t s i n v o l v e d i n t r a i n i n g o r i n learning-by-doing, h e i s u n w i l l i n g t o pay f o r t h e s e c o s t s . Thus, d u r i n g t h e p e r i o d of s k i l l - a c q u i s i t i o n t h e wagle r e c e i v e d i s t h e a c t u a l n a r g i n a l p r o d u c t minus t h e c o s t s i n v o l v e d . This i m p l i u that the g r a p h o f vage a g a i n s t ernplcynent e x p e r i e n c e i s l i k e i y i n i t i a l s t o be upward s l o p i n g : low a t f i r s t b e c a u s e t r a i n i n g c o s t s a r e d e d u c t e d from  - i - 5 z IS 'I, .-..1? - -. 0 .. " - -= . . . . .-- a- -0 " 3 ill -: -. .- .. - . -0 0- *>a. " It -- - 4 2 -. ..... . . - 4 . . ma- - =- -n7 -.--. -3 .a i . - . -'. >2 ' - D 2:;; - - . -. 2 . a - . 2 3 ."a a&-- -. :: L .. . -. L -::: =, = i a r c - D = * -^.a=. i I P 3 - i - -*. = a 6 . . " ? - .-.*.-,--. *.a7 .D A. . > - a .-.I *2.. 2 - 1 a,<- 2- 7 - L .a*- -a->;.. .-"C-s a , a , ----.-u ,-., .-ma-- 2 - -L 4-  t h e wage b u t r i s i n g a s t h e p r o d u c t o f t h e w o r k e r i n c r e a s e s and a s t r a i n i n g diainishes. I f s k i l l a c q u i s i t i o n c e a s e s , t h e wage c u r v e r e a c h e s a p e a k , a n d i f nunan c a ? i t a l d e p r e c i a t e s .dith t i n e , t h e v a g s t h e n b s g i n s t o f a l l . X e g r e s s i s n 1 i n c l u d s s t o t a l y e a r s i n u a g e e n p l o y e n t (L2) z s a c o n t i n u o u s v a r i a b l e t o r e p r e s e n t on-the-job s k i l l acquisition. To t e s t f o r n o n - l i n e a r i t y i n t h e r e l a t i o n s h i p between e a r n i n g s i n d e x p e r i e n c e t h e squared tern ( ~ 2 ) ' i s a l s o included. Xegrsssion 2 i n s t e a d uses experience du3my v a r i a b l e s t o n e a s u r e r e t u r n s t o e x p e r i e n c e and c a p t u r e n o n - l i n e a r i t y . S i g n i f i c a n t p o s i t i v e c o e f f i c i e n t s a r e o b t a i n e d on t h e e x p e r i e n c e v a r i a b l e s i n both equations. The v a l u e of t h e c o e f f i c i e n t on L2 i s 0 . 0 5 6 ; t h e c o e i f : c i e n t on t h e squared t e n i s n e g a t i v e , a s p r e d i c t e d , and s i g n i f i c a n t l y s o ; a t t h e n e a n v a l u e o f L2 ( 9 . 0 y e a r s ) , e x p e r i e n c e a d d s 42 p e r c e n t t o - The c o e f f i c i e n t s o n t h e d u m y v a r i a b l e s r i s e c o n s i s t e 2 t l y earnings./l u p t o and i n c l u d i n g t h e h i g h a s t e x p e r i e n c e c a t e o g r y ( 1 2 o r n o r e y e a r s ) . I n sum, r e g r e s s i o n s 1 and 2 i n d i c a t a t h a t t h e p r e r n i b s e a r n e d by n o r e e x p e r i e n c e d w o r k e r s a r e l a r g e and s u b j e c t t o o n l y s l l i g h t l y d i m i n i s h i n g The l o s s o f g e n ~ r a ls k i l l s a s s o c i a t e d w i t h s h o r t - t e n c i r c u i a r m i g r a t i o n imposed c o s t s o n t h e u r b a n economy. However, i n t e r - f i n , as y e l l a s u r b a n r u r a l , n o b i l i t y may b e c o s t l y i f employees a c q u i r e f i r s - * , I specific skills. S i n c e , by d e f i n i t i o n , f i r m - s p e c i f i c s k i l l s possess - 1/ - The c o e f f i c i e n t s i m p l y a p e a k i n g o f t h e earnjLngs e x p e r i e n c e p r o f i l e - a t 28 y e a r s a f e x p e r i e n c e ; f e w e r t h a n 2 p e r c g n t o f t h e s a m p l e had g o n e beyocd t h e peak. The peak i s d e r i v e d b r d i f f e r e n t i a t i n g t h e I - f u n c t i o n a(L2)+b(L2) a n d s o l v i n g a+2b(L2)=OS - 2/ F i n d i n g s p r e s e n t e d i n S e c t i o n I I ( i i ) , however, s u g g e s t t h a t t h e s e r e s u l t s 3 v e r - e s t i n a t e t h e r e t u r n s t o e x p e r i n e c d p e r s e , and h e n c e to s k i l l acquisition.  no a a r k e t v a l u e t h e wage p a i d an employee s h o u l d be i n d s p e n d e n t of t h e s e skills. T h i s h p l i z s t h a t t h e f i n b o t h pays t h e c o s t s and e n j o y s t h e b e n e f i t s of q p e c i f i c t r a i n i n g , and h e n c e t h a t , d i s r e g a r d i n g t h e i n f l u e n c e of g e n e r a l s k i l s , t h e wage-experience ? r o f i l e should be h o r i z o n t a l . It i s t h e i n c r e a s e i n t r a i n i n g c o s t s resulting f r ~ n labor turnover that g i v e s t h e employer a n i n c e n t i v e t o p a s s on a p r o p o r t i o n o f ' t h e b e n e f i t s of s p e c i f i c s k i l l a c q u i s i t i o n t o t h e employee i n t h e E o n o f h i g h e r p a y . / - l The g r a d u a l a c q u i s i t i o n of f i m - s p z c i f i c s k i l l s therefore implies a positive c o e f f i c i e n t o n :rears or' c u r r e n t e a p l o p z n t e x p e r i e n c e . However, e v e n i f firm-specific s k i l l a c q u i s i t i o n were i n s t a n t a n e o u s , e m p l o y e r s m i g h t r a t i o n a l l y i n t r o d u c e s e n i o r i t y p a y x e n t s a s ano t h e r way o f d i s c o u r a g i n g t u r n o v e r . /- 2 Sy d e f i n i t i o n , t h e o n l y s k i l l s a worker b r i n g s t o a new e a p l o y e r a r e t h e g e n e r a l s k i l l s a c q u i r e d i n p r i o r emplo)-e2t o r forsal training. By c o n t r a s t , a n e n p l o y e r b e n e f i t s from b o t h t h e g e n e r a l a n d t h e f i x - s p e c i f i c s k i l i s acquired w h i l e t h e workers i s i n h i s enploy. iihether t h e r e t u r n s t o a y e a r of e x p e r i e n c e i n c u r r e n t employnent exceed t h e r e t u r n s t o a y e a r of e x ~ e r i 8 n c ei n p r i o r e n p l o y n e n t s i s t h e r e f o r e a t e s t of w h e t h e r w o r k e r s a c q u i r e and e m p l o y e r s v a l u e f i n - s p e c i f i c skills. S e g r e s s i o n s 7 and 8 i n d i c a t e t h a t t h e r e t u r n s p e r y e a r o f c u r r e n t employnent , e x p e r i e n c e a r e s u b s t a c t i a l l y g r e a t e r t h a n r e t u r n s p e r y e a r of e x p e r i e n c e i n I p r e v i o u s ernploysent - r e s u l t s t h a t s t r o n g l y s u g g e s t t h a t f i n o reward 11 The e r n p l ~ y e rh a s a n i n c e n t i v e t o r a i s e t h e wage ? a i d t o vrorkers - w i t h f i n - s p e c i f i c s k i l L s by a n a n o u n t d e p e n d i n g on t h e c o s t of t u r n o v e r and t h e r e s p o n w of t u r n o v e r t o wage i n c r e a s e s . The e q u i l i b r i u m wage c o n d i t i o n i s t h a t t h e c o s t o f a s a r g i n a l v a g e i n c r e a s e should e q u a l t h e consequent deczease i n :raining c o s t . T h a t i s t h e f o m i n wnich t h e ' l a b o r t u r n c v e r ' n o d e l of vage determination i s n o m a l l y c a s t . See S t i g l i t z ( 1 9 7 4 ) . - 2/ S e e , f o r i n s t a n c e , Okun ( 1 9 8 1 ) , ? p . 5 2 - 5 . fin-specific a s c e l l a s general s k i l l s . /- l The T a n z a n i a n s a g e s t r u c t u r e d i s c o u r a g e s employee q u i t s n o t o n l y t o r u r a l a r e a s b u t a l s o t o o t h e r fins. :uhether f o n a l t r a i n i n g c o n f e r s g e n e r a l a n d / o r f i n - s p e c i f i c s'cills, t h e t h e o r y o u t l i n e d a5ove p r o v i d e s t h e b a s i s f o r two p r e d i c t i o n s : v o r k e r s yiho have had f o m a l t r a i n i n g r e c e i v e a wage prenium; t h e s i z e of t h e prenium i s a p o s i t i v e f u n c t i o n of employment e x p e r i e n c e . Xegressions 1 and 2 i n d i c a t e t h a t f o m a l t r a i n i n g a d d s o n a v e r a g e ro:ighly 1 4 p e r c ~ ~ i t t o earnings. I n r e g r e s c i o n s 3 6 t h e sample i s s t r a t i f i e d by l e n g t h of wage employment e x 7 e r i e n c e . The c o e f f i c i z n t o n f o r n a l t r a i n i n g i s h i n i t i a l l y n e g a t i v e and s u b s e q u e n t l y p o s i t i v e , a n d r i s e s ~ i t leng,th of experience. T h i s s u g g e s t s t h a t t h e employee h a s t o ? a y , i n t h e f o m o i a l o C . ? r v a g e , f o r t r a i a i n g i n s k i l l s , and s u b s e q u e n t l y d e r i v e s a r e t u r n from t h e i n v e s t m e n t . The s t r u c t u r e 05 r e t u r n s t o ; P a i n i n g p r o v i d e s y e t a n o t h e r i n c e n t i v e f o r workers t o a c c u n u l a t e experience. The g e n e r a l s k i l l s a c q u i r e d i n p r e v i o u s employment e x p e r i e n c e Y f e l d a vage premium t o a p l o y e e s . Does t h e number o f j o b s i n which t h i s e x p e r i e n c e was a c c u n u l a t e d a a t t e r ? The h i g h l y s o b i l e g r o u p i n c l u d e s :he w o r k e r who p e r s i s t e n t l y f l i c s from o n e j o b t o a n o t h e r b e c a u s e e v e r y employer f i n d s h i s p e r f o m a n c e t o be , m s a t i s f a c t o r y . I n t h a t case a o b i l i t y should depress earnings. Z t may a l s o i n c l u d e t h e worker who c h a n g e s LI e m p l o y e r s b e c a u s e h e c o n s i s t e n t l y t r i e s t o b e t t e r h i n s e l f and goes o n a c q u i r i n g s k i l l o r seeking o u t h i s comparative advantage. Xobility of t h a t s o r t should r a i s e earnings. The f o m e r t y p e o f ~ o b i l i t yis likzly * . t o b e i n v o l u n t a r y wherzas t h e l a t t e r i s v o l u n t a r y : v e a a ) t h e r e f o r e - 1/ Zquation 8 i n d i c a t e s t h a t 50th squarsd terns a r e n e g a t i v e , i . e . , t h a t b o t h p r i o r and c u r r e n t employment e x p e r i e n c e a i 2 s u b j e c t t o diminishing r e t u r z s . h y ? o t h e s i z e a n e g a t i v e c o e f f i c i e n t f o r i n v o l u n z s r y and a p o s i t i v e c o e f f i c i e n t f o r voluntsry nobility. These h y p o t h e s e s a r = b o r n e o u t 5y z n e a r n i n g s f u n c t i o n vhich i n c o r p o r a t e s a e a s u r e s of x o b i l i t y , although both coeffi- c i z n t s a r e s i g 2 i f i c a n t o n l y a: a b o u t t h e 10 p e r c e n t 12921. Z e g r e s s i o n s 9-12 p r o b e f u r t h e r t h e s t r u c t u r e of r e t u r n s t o e n p l o y n e n t e x p e r i e n c e by p r e s e n t i n g t h e r e t u r n s t o p r e v i o u s e n p l o y i e n t e x p e r i e n c e f o r u o r k e r s w i t h d i f f e r e n t l e n g t h s o f expeGience i n t h e i r c u r r e n t enploynent. T h e s e r e t u r n s a r e q u i t e h i g h among x o r k e q s w i t h l i t t l e e x p e r i e n c e i n t h e i r c u r r e n t job, i . e . , employers pay s u b s t a n t a i l l y a o r e t o w o r k e r s who b r i n g g e n e r a l s k i l l s a c q u i r e d i a p r e v i o u s s n p l o y x e n t t h a n t o raw r e c r u i t s t o t h e uage l a b o r f o r c e . .After e i g h t y e a r s of e x p e r i k n c c i n t h e c u r r e n t j o b , however, a worker w i t h p r e v i o u s e x p e r i e n c e no l o h g e r e a r n s a o r e t h a n o n e w i t h o u t such e x p e r i e n c e . Ii s u g g e s t s t h a t o v e r t h i s p e r i o d w o r k e r s w i t h o u t p r i o r e x p e r i e n c e a r e a b l e :o c a t c h u ? , and tol a c q u i r e a l l t h e g e n e r a l s k i l l s o t h e r w o r k e r s a c q u i r e d i n p r e v i o u s employment. 3 e g r e s s i o n s 13-16, s t r a t i f i e d by o c c u p a t i o r ( a 1 l e v e l , p r o v i d e t h e b a s i s f o r an h p o r : n a t q u a i i f i c a t i o n of our a n a l y s i s . F i r s t , however, n o t ? t h a t t h e o n l y o c c u p a t i o n i n which t h e c o e f f i c i e n t o n y e a r s o f c u r r e n t enploy- ment e x p e r i e n c e d o e s 3 o t exceed t h a t on y e a r s of p r e v i o u s e n p l o p e n t e x p e r i e n c e is s k i l l e d nanual labor. .k =any skilled v o r k e r s a r e q u a l i f i e d a r t i s a n s , t h i s i s t h e o c c u p a t i o n i n which s k i l l s a r e l e a s t l i k e l y t o be fim-specific. The q u a l i f i c a t i o n c o n c e r n s t h e r o l e o f i n s t i t u t i o n a l f o r c e s - - i n s h a p i n g t h q s t r u c c u r e of i n c e n t i v e s t h a t l e d t o t h e s t a b i l i z a t i o n of ri Tanzania's wage l a b o r f o r c e . I n t e r n a l l a b o r a a r k e t phenomena, i n c l u d i n g * seniority-based scales, x a y have i n f l u e n c e d t h e compies e x p e r i e n c e s t r u c t u r e of s a r n i n ~ ss e have d o c u n e n t e d . Xegression 13 provides sons supporting evidence: c o n s i s t e n t w i t h our e x p e c t a t i o n s , u n s k i l l e d l a b o r e a r n s no s i g n i f i c a n t r e t u r n s t o p r e v i o u s e a p l o y m e n t e x p e r i e n c e ; t h e p o s i t i v e , l a r g e and s i g n i f i c a n t r e t u r n s t o c u r r e a t a a p l o y z e n t e x p e r i e n c e , h o w e v e r , s u g g e s t t h e operation of i n t e r n a l l a b o r x a r k e c s . I n d e e d , i: i s p o s s i b l e t o s u g g e s t i n t e r n a l l a b o r s a r k e t + s p l a n a t i o n s f o r nany o f t h e phenomena we h a v e i d e n t i f i e d . / l - T h i s d o e s n o t n e c e s s a r i l y i a p l y a con- t r a c i c t i o n between hcman c a p i t a l and i n t e r n a l l a b o t m a r k e t t h e o r i e s . The l a t t e r c a n b e a s f i r s l y r o o t e d i n a s s u m p t i o n s o f p r o f i t - g a x i m i z a t i o n - Yor d o e s a r o l e f o r i n t e r n a l l a b o r n a r k e t s by e m p l o y e r s a s t h e f o n n e r . / 2 u n d e r c u t o u r a r g u n e n t s t h a t t h e s t r u c t u r e o f wage p r o v i d e s i n c e n t i v e s f o r accumulating skills. tiowever, e v i d e n c e of s u c h a r o l e i n d i c a t e s t h e n e e d f o r g r e a t e r c a u t i o n i n d r a w i n g a n y c o n c l u s i o n s , f o r example re- g a r d i n g t h e p r e c i s e m a g n i t u d e of r e t u r n s t o p o s t - s c h o o l skill-acquisition, t h a t depend on t h e a s s u m p t i o n of z q u a l i t y S e t t i e e n wages and m a r g i a a l productivity. 's - 1/ :Knight and S a b o t ( 1 9 8 1 ) . - i . - 2/ S e e , f o r i n s t a n c e , i i i l l i a s s o n , !iach& - and H a r r i s ( 1 9 7 5 ) .  (ii) The R e t u r n s t o E d u c a t i o n arid Fil.tering-Down X o r e t h a n any o t h e r p a r v n e t e r i n 2 a r n i n g s f u n c t i o n a n a l y s i s , t h e c o e f f i c i e n t o n e d u c a t i o n b a s conmanded a t t e n ' i o n o n account of i t s u s e i n e s t i m a t e s o f r a t e s of r e t u r n t o e d u c a t i o n . I3 T a n z a n i a we f i n d t h e c o e f f i c i e n t t o be p o s i t i v e , l a r g e , and h i g h l y s i g n i f i c a n t , a r e s u l t univer- s a l l y o b t a i n e d i n r i c h and poor c o u n t r i e s a l i k e . Segression I i n Table 8 i n d i c a t e s t h a t , o n a v e r a g e , e a r n i n g s i n c r e a s e by 5 p e r c e n t p e r y e a r of education. Our f o c u s h e r e i s o n a n upward b i a s o f t h i s e s t i z i a t e ( a n d of e s t i m a t e s s i m i l a r l y o b c a i n e d e l s e w h e r e ) t h a t c a n o c c u r when t h e r e i s a p o s i t i v e i n t e r a c t i o n S e t v e e n t h e r e t u r n s t o e d u c a t i o n and t h e l e n g t h o f enployinent e x p e r i e n c e . The s o u r c e o f t h e p r o b i m i s t h e d u a l r o l e o f t h e e x p e r i e n c e v e r i a b l e : n o t o n l y d o e s i t i a d i c a t e t h e l e n g t h o f time a w o r k e r h a s b e e n i n wage e m p l o y u e n t b u t a l s o t h e y e a r i n which he e n t e r e d t h e I l wage l a b o r f o r c e . / - Thus what a p p e a r s t o b e i n c r e a s i n g r e t u r n s co e d u c a t i o n I w i t h 2xperience could a c t u a l l y be decreasing r e t u r n s t o successive cohorts I I ~ o f e n t r a n t s t o wage employment. Ijhen t h e p r o d u c t t e r n e d u c a t i o n x enp10,vnent e x p e r i e n c e i s i n t r o d u c e d ( i n r e g r e s s i o n 2 ) i t p r o v e s t o b e p o s i t i v e and h i g h l y s i g n i - ficant./2 Noreover, t h e i n t r o d u c t i o n of t h i s term reduces t h e c o e f f i - c i e n t on e d u c a t i o n ( . is no l o n g e r s t e t i s t i c a l l y s i g n i f i c a n t ) a n d t h e 1/ 4 Hence o u r u s e of t h e t o t a l wage employinewnt e s p e r i e n c e v a r L a b l e r a t h e r t h a n c u r r e n t aqd 2 r e v i o u s e x p e r i e n c e i n thFs s e c t i o n , .a - - 2/ P o s i t i v e i n t e r a c t i o n between e d u c a t i c n and e x p e r i e n c e i s 3oG u n i q u e ' t o T a n z a n i a . L a y a r d and P s a c h q r c p o u l o s ( 1 9 7 4 , p. 99L) p r o v i d e e v i d e n c e of s u c h a r e l a t i o n s h i p f o r t h e U n i t e d S t a t e s , a l a u g ( 1 9 7 4 , p . a ) f o r T h a i l a n d , H a z m d a r 1 9 8 0 , pp. 143-4 f e Y f l a y s i a , .Anderson ( 1 9 8 0 , p. 1 3 9 ) f o r E l S a l v a d o r , and P s a c h a i o p o u l o s and L a y a r d ( 1 9 7 9 , 2 . 443 a n d T a b l e 1 1 1 ) f o r 3ritain.  Table 8 EARNIWC-S FUXC'iZON WITH A i KITEOUT TXE INTSUCTION TEEY Coefficient Independent Variable Equation L Equacion Z Education .0491** .0148 Employment e x p e r i e n c e -!556** .0338** Employmant a x p e r i e n c e squared E d u c a t i o n x employment exp.?rience Clerical S k i l l e d manual Semi-skilled nanual - R? NGTES: V a r i a b l e s i n c l u d e d i n t h e e q u a t i o n s b u t not r e p o r t e d i n t h b t a b l e a r e f o r m a l t r a i n i n g ; m i g r a n t s t a t u s , s e x and age dummies. The t a b l e i s derived from K11Fght and Sabot (1981a1, Table 1.  - 31 - c o e f f i c i e n t on e x 2 e r i e n c e (which remains s i g n i f i c a n t ) . At t h e n e a n v a l u e s o f e d u c a t i o n and z x p e r i e n c s ( 3 . 6 3 a n d 9.02 y e a r s r e s p e c t i v e l y ) e d u c z r i o n r a i s e s e a r n i n g s by 5 . 5 ; e r c e n t , e x p e r i e n c e by 2G.8 2 e r c e n t and t h e i r ? r o d u c t b y 12.G p e r c e n t . !!oreover, t h e a p p l i c a t i o n o f che h i e r a r c h i c a l F t e s t t o r e g r e s s i o n s 1 and 2 r e f u t e s t h e n a l l h y p o t h e s i s t h a t t h e ; n t e r a c t i o n t e n i s not significant. E s t i n a t e s of the r e t u r n s i3 e d u c a t i o n and t o e x p e r i e n c e i n T a n z a n i a c l e a r l y depend on t h e i n t z r ? r e t a t i o n of t h e i n c e r a c t i o n between these variables. 3 0 t h human c a p i t a l t h e o r y a n d s c r e e n i n g t h e o r y a r e c a p a b l e o f e x p l a i n i n g a p o s i t i v e i n t e r a c t i o n between e d u c a t i d n and e x p e r i e n c e . 1- 1 The credence given t3 t h e alternative i n t e r ~ r e t a c i o nc h a t t h e I n t z r a c t i o n r e p r e s e n t s d e c r e a s i n g r e t u r n s t o e d u c a t i o n o v e r t b e depends on t h e answers t o two r e l a t e d q u e s t i o n s . khy s h o u l d s t h e r e t u r n s t o e d u c a t i o n d e c r e a s e f o r successive cohorts? i;hy s h o u l d e a r l i e r e d u c a t e d c o h o r t s be b e t t e r i n s u l a t e d Prom t h e f o r c e s r e d u c i n g r e t u r n s t h a n n o r e r e c e n t c o h o r t s ? I n Tanzania d u r i n g t h e 1960s t h e n u n b e r o f s c h o o l l e a v e r s i n c r e a s e d f a s t e r t h a n t h e d e n a n d f u r l a b o r i n t h e o c c u p a t i o d s which e a r l i e r c o h o r t s l a r g e l y entered. T h i s caused r n e r 2 l a t i o n s h i p between che e d u c a t i o n a l a t t a i m e n t s o f \-orksrs and t h e i r o c c u p a t i o n s t o change. There occurred a Frocess of "filtering-dova," i-e., t h e s o v e m e n t o$ p e r s o n s a t e a c h l e v e l of - - I L P 11 - I t - i s s u f f i c i e n t f o r a human c a p i t a l t h e o r i s t t h a t p r i o r e d u c a t i o n be an.'input i n t o t h e p r o d u c t i o n f u n c t i o n o f s k i l l s a c q u i r e d a f t e r t h e .+ completion of f ~ r n a ~ s c h o o l i n g i .,e . , t h e p o s s e s s i o n o f e d u c a t i o n i t g e l f f a c i l i t a t e s s k i l l - a c q u i s i t i o n on t h e job. 70 a n a d h e r e n t o f screening theory, t h e resulr follows i f a b i l i t y i s an input i n t o the p r B u c t i o n f u n c t i o n of s k i l l s and i f t h e r e i s a p o s i t i v e c o r r e l a t i o n b e t w e e n a b i l i t y a n d ? d u c a t i o n w h i c h i s r?cogn$.zed and u s e d by employers. education i n t o l e s s e r jobs o r - t h e r e v e r s e of t h e c o i n - the educational upgradiriq of e a c h o c c u p a t i o n a s c h e s u p p l y o f e d u c a t e d manpower expanded. Fron r e m a r k a b l y low ? x o l l a e n t r a t e s a: Indspendence i n 1961 t h e e d u c a t i o n a l s y s t e n expanded r a p i d l y - the annuzi average r a t e s being 1 8 , 10 and 6 p e r c e n t f o r tertiary, s e c o n d a r y and Q r i n a r y e n r o i l a e n t r e s - pectively over t h e decade p r i o r t o our survey. The a n n u a l i n c r e m e n t s t o n o n - a g r i c u l t u r a l enployment o v e r t h e d e c a d e a v & r a g e d 10,000 j o b s . In 1962 t h e nunber of p r i a a r y and p o s t - p r h a r y school leavers entering the l a b o r f o r c e j u s t exceeded 1 0 , 0 0 0 ; i n 1970 t h e r e v e r e some 58,000 p r i a a r y and more t h a n 5 , 0 0 0 post-primary leavers. The g r e a t m a j o r i t y o f p r i m a r y s c h o o l l e a v e r s c o u l d no l o n g e r o b t a i n v a g e e o p l o p e n t a n d , w i t h most " l o c a l i z a t i o n " of employment compl:.e, v h i t e c o l l a r jobs f o r secondary s c h o o l l e a v e r s c o u l d no l o n g e r be a s s u r e d . The s c o p e f o r b e t t e r e d u c a t e d w o r k e r s t o o u s t l e s s e d u c a t e d i n c u m b e n t s from t h e i r j o b s i n s e v e r e l y c i r c u n s c r i b e d i n T a n z a n i a a s i n - The i m p l i c a t i o n i s t h a t f i l t e r i n g - d o w n c a n o c c u r o n l y many c o u n t r i e s . / l a s new j o b s a r e c r e a t e d o r o l d j o b s Secone v a c a n e , a n d t h a t t h e b r u n t o f a d j u s t m e n t i s b o r n e by e n t r a n t s 3o t h e v a g e l a b o r m a r k e t , among whom : e m p l o y e r s a r e f r e e t o choose. S c a r c e yage e m p l o m e n t o p p o r t u n i t i e s a r e r a u i o n e d among competing job-see kers, x i t h t h e l e v e l of education as t h e p r f n c i ~ a lc r i t e r i o n , and w i r h a r i s e i n t h e e d u c a t i o n a l a t t a i n m e n t of nore recent recruits a s the predictable r e s u l ~ . - 1/ The S e c u r i t y o f L a p l o p e n t A c t o c 1 4 .:r.:e k o r k e r s c o n s i d e r a b l e j o b s e c u r i t y , and i n any c a s e t h e g e n . 1 e t h o s would be over- whelmingly a g a i n s t t h e n o t i o n t h a ? a worker n i g h t b e d i z p e n s e d w i t h f o r no b e t t e r r e a s o n t h a n t k a t a n o r e s d u c a t e d v o r k e r s was available.  T a b l e 9 shows t h a t , w i t h i a a n o c c u p a t i o n , t h e p r o p o r t i o n o f workers of a p a r t i c u l a r educational l e v e l v a r i e s g r e a t l y according t o t h e d a t e of e n t r y t o v a g e eaployment. The v a l u e of X 2 i s h i g h l y s i g n i f i c a n t f o r a l l groups o t h e r than white c o l l a r . Vneducated e n t r a n t s and t h o s s w i t h o n l y s t a n d a r d s 1-4 v e r e i n c r e a s i n g l y u n a b l e t o o b t a i n v a g e e n p l o p e n t . T ! o f e w e r t h a n 77 p e r c e n t of a a n u a l v ~ r k e r si n t h e e a r l i e ~ s tc o h o r t ( e n t e r i n g v a g e employmewnt i n t h e 1 9 5 0 s ) had l e s s t h a n 5 y e a r s o f e d u c a t i o n , t o be c o n t r a s t e d v i t h 3 1 p e r c e n t of t h e a o s t r e c e n t c o h o r t ( e n t e r i n g d u r i n g t h e p e r i o d 1968-71). The tendency f o r t h i s p r o p o r t i o n t o f a l l i s t o be found a t each oanual s k i l l l e v e l : even iii t h e c a s e of u n s k i l l e d w o r k e r s , i t d e c l i n e d from 92 p e r c s n t f o r t h e e a r l i e s t c o h o r t t o $ 6 p e r c e n t For t h e a o s t recent. Secondary s c h o o l l e a v e r s i n c r e a s i n g l y e n t e r e d t h e s k i l l e d n a n u a l o c c u p a t i o n s , t h e c o r r e s p o n d i n g p r o p o r t i o n s b e i n g 3 afld 26 p e r c e n t r e s p e c - tively. Filtering-down was nuch n o r e l i s i t e d i n w h i t e c o l l a r o c c u p a t i o n s t h a n i n nanual jobs. It might be o b j e c t e d t h a t c o h o r t d i f f e r e n c e s i n occupational d i s t r i b u t i o n c o u l d r e p r e s e n t promotion of e a r l i e r c o h o r t s r a t h e r t h a n filtering-down. \ c o r r e s p o n d i n g s u r v e y c o n d u c t e d Ln 1980 by a t e a n i n c l u d i n g . t h e a u t h o r s p e r m i t s a t e s t of t h i s h y p o t h e s i s . A c o m p a r i s o n c a n be x a d e between t h e 1 9 7 1 o c c u p a t i o n a l d i s t r i b u t i o n of t h e c o h o r t s e n t e r i n g employnent i n t h e p e r i o d s 1956-62 and 1965-71, 2nd t h e 1980 d i s t r i b u t i o n of t h e 1965-71 cohort. The a o s t r e c e n t c o h o r t iit 1 9 7 1 d i d n o t a c h i e v e by 1980 t h e 1 9 7 1 d i s t r i b u t i o n of t h e c o h o r t 9 y e a r s t h e i r s e n i o r . I n t h e c a s e of x o r k e r s - -5 i v i t h s t a n d a r d s 7-8 i?1 9 7 1 , t h e 3 r o p o r t i o n i n u n s k i l l e d and s a i - s k i l l e i - j o b s was 30 h i g h e r f o r t h e l a t e r c c a o r t ; o n l y 7 p e r c e n t v a s due* - t o p r o m o t i o n and 2 3 p e r c e n t t o f i l t e r i n g - d o w n . I n t h e c a s e of t h o s e w i t h  Table 9 EDL'CAT1OXA.L COX'OS1TIC:I3F . S R I C L w ?ZGUL.LP ELXFLCX?IT JY YEAR EW-RED VAGE W L O M N T Year e n t e r e d No Standards St a ~ d a r d s Foms O c c u p a t i i 5-8 1- Ha nual White Collar All Employees 1968-71 14.5 13 .O 59 .5 13 .O 1964-67 26.2 24.8 44.2 4.9 1960-63 26 .O 35.2 31.1 7.8 -1959 31.8 37.9 24.2 6.1 f o n s 1-4 i n 1971, t h e p r o p o r t i o n Tfi'manual j o b s v a s 1 6 p e r c e n t h i g h e r f o r t h e l a t e r c o h o r t ; o n l y 3 p e r c e n t v a s due t o p r o m o t i o n and 13 p e r c e n t t o The o c c u p a t i o n a l s t r u c t u r e of wages played a c e n t r a l r o l e i n t h e r e l a t i v e i n s u l a t i o n o f e a r l i e r c o h o r t s from t h e f o r c e s r e d u c i n g r e t u r n s t o e d u c a t i o n a t t h e margin. I n a p e r f e c t l y competitive l a b o r market an i n c r e a s e i n t h e r e l a t i v e s u p p l y o f e d u c a t e d w o r k e r s would r e s u l t i n a g e n e r a l r ~ d u c t i o ni n t h e prernium p a i d t o t h e e d u c a t e d ; b o t h t h i s r e d u c t i o n and t h e i n c r e a s e d e d u c a t i o n a l a t t a i n m e n t s o f v o r k e r s i n l e s s e r j o b s would produce a c o m p r e s s i o n of t h e o c c u p a t i o n a l wage s t r u c t u r e . I n t h e Tanzanian c a s e , d u r i n g t h e d e c a d e b e f o r e our s u r v e y , s u c h c o n p r e s s i o n was slow t o o c c u r b e c a u s e s u p p l y and demand had o n l y a n i n d i r e c t e f f e c t on e a r n i n g s . Dobnward m a r k e t p r e s s u r e on wages v a s weakened by t h e s e c u r i t y o f t e n u r e which encumbents g e n e r a l l y e n j o y e d , and by t h e e f f e c t on t h e p r i v a t e s e c t o r of i n s t i t u t i o n a l wage d e t e r m i n a t i o n i n t h e p u b l i c s e c t o r which was t h e ~ a i n employer of e d u c a t e d l a b o r . Evidence of t h i s i s p r o v i d e d by T a b l e 8 which shows n o t o n l y t h e c o e f f i c i e n t s on e d u c a t i o n and e x p e r i e n c e b u t a l s o t h o s e on t h e f o u r o c c u p a t i o n dummy v a r i a b l e s s u p e r v i s o r y , c l e r i c a l , s k i l l e d s a n u a l and s e m i - s k i l l e d n a n u a l ( w i t h u n s k i l l e d n a n u a l a s t h e b a s e s u b - c a t e g o r y ) . A p a r t from t h e s e n i - s k i l l e d c a t e o g y , t h e c o e f f i c i e n t s on t h e o c c u p a t i o n dummies a r e s i g n i f i c i n t l y p o s i t i v e and l a r g e . f n addition t o the personal economic c h a r a c t e r i s t i c s which he b r i n g s t o a j o b , t h e o c c u p a t i o n o f a - work<r makes a s u b s t a n t i a l d i f f e r e n c e t o h i s e a r n i q g s . Yoreover, t h e L econ+c v a l u e o f b o t h employaent z x p e r i e n c e and e d u c a t i o n depends on t h e * o c c u p a t i o n i n which t h e y a r e a p p l i e d . The c o e f f i c i e n t on e d u c a t i o n i s .009, _ B .001, .069** and .122** i n t h e uns'killed, semi-s1killed, s k i l l e d and non-nanual occupations res?ectively./l - The c 3 e f f i c i e n t on employment e x p e r i e n c e , w i t h t h e e x c e p t i o n o f t h e s k i l l e d manual c a t e g o r y , r i s e s w i t h s k i l l ( .033**, .050**, .041* and .097** r e s p e c t i v e l y ) . I n sm, t h e d i f f e r e n c e i n o c c u p a t i o n a l c o m p o s i t i o n of d i f f e r e n t c o h o r t s i s t h e key t o t h e p o s i t i v e i n t e r a c t i o n t e n S e t v e e u e d u c a t i o n and e x p e r i e n c e r e p o r t e d i n T a b l e 8. & filtering-down occurred, so educated . r e c r u i t s e n t e r e d o c c u p a t i o n s i n which b o t h v a g e s and t h e r e t u r n s t o e d u c a t i o n were l o w e r . The sovement i n t o l e s s w e l l - p a i d o c c u p a t i o n s lowered t h e pay o f aorn recent cohorts. T t a l s o l o v e r e d t h e c o e f f i c i e n t on t h e e d u c a t i o n v a r i a b l e f o r then. The c o e f f i c i e n t on e d u c a t i o n c a n be viewed a s t h e w e i g h t e d a v e r a g e o f t h e c o e f f i c i e n t s on e d u c a t i o n f o r t h e d i f f e r e n t occupa- ' t i o n s : t h e g r e a t e r w e i g h t a t t a c h e d t o l e s s e r o c c u p a t i o n s f o r t h e more r e c e n t c o h o r t s t h e r e f o r e reduced t h e c o e f f i c i e n t i n t h e i r c a s e . The i i n p l i c a t i o n s of t h i s phenomenon a r e p o t e n t i a l l y f a r - r e a c h i n g . I f t h e a p p a r e n t r i s e i n t h e r e t u r n s t o e d u c a t i o n w i t h employment e x p e r i e n c e i s p a r t l y o r s a i n l y d u e t o a f a l l i n t h e r e t u r n s t o t h e more r e c s n t c o h o r t s , t h e n t h e c o e f f i c i e n t on t h e e d u c a t i o n v a r i a b l e i n o u r r e g r e s s i o n e q u a t i o n , by a v e r a g i n g o v e r t h e sample a s a whole, o v e r e s t i m a t e s t h e a a r g i n a l r e t u r n s - The g r o s s p r i v a t e m a r g i n a l r e t u r n s n a y b e c l o s e r t o 1.5 t o education./2 p e r c e n t p e r annum (when employment e x p e r i e n c e e q u a l s z e r o ) t h a n 5.0 p e r c e n t I . I p e r annum (.when employment e x p e r i e n c e e q u a l s i t s mean v a l u e of 9.0 y e a r s ) . - It i s o f c o u r s e t h e s a r g i n a l , n o t the+ a v e r a g e , r e t u r n s t h a t a r e r e l e v a n t t o '5 p r i v a t e and p u b l i c d e c i s i o n - n a ; d n g on; e d u c a t i o n a l i n v e s t i n e n t . - 1/ The i n t e r a c t i o n t e r n v a s d e l e t e d from t h e s t r a t i f i e d r e g r e s s i o n s a f t e r i t p r o v e d , a s e x p e c t e d , n o t t o be s i g n i f i c a n t . - 2/ For t h e same r e a s o n t h e r e t u r n s t o e x p e r i e n c e and t h u s t o s k i l l a c q u i s i t i o n would a l s o be o v e r e s t i m a t e d . - ( i i i ) Human C a p i t a l and t h e I n e q u a l i t y of Pay The hunan c a p i t a l v a r i a b l e s t o g e t h e r account f o r 6 3 p e r c e n t of t h e e x p l a i n e d v a r i a n c e of e a r ~ i ~ g (Tsa b l e 5 ) . T a b l e 1 0 i n t u r n shows t h e p e r c e n t a g e components of t h e v a r i a o c e t h a t i s e x p l a i n e d by t h e hunan capital. v a r i a b l e s , u s i n g t h e nethod o u t l i a e d i n S e c t i o n I(v). We s e e from t h e decomposition i n t h e f i r s t c o l m n t h a t t h e l a r g e s t c o n t r i b u t o r t o t h e i n e q u a l i t y of pay i s t h e s e t o f o c c u p a t i o n t e r n s . E d u c a t i o n and t h e combined e x p e r i e n c e v a r i a b l e s a r e of e q u a l h p o r t a n c e . I t i s notable t h a t previous experience plains more of t h e v a r i a n c e t h a n c u r r e n t e x p e r i e n c e d e s p i t e t h e f a c t t h a t 37 p e r c e n t of t h e s a n p l e have no p r i o r e x p e r i e n c e . Occupation r e t a i n s f i r s t p l a c e i n t h e second decomposition, b u t i t i s now r i v a l l e d by t h e e d u c a t i o n x e x p e r i e n c e product term: t o g e t h e r they a c c o u n t f o r two-thirds of t h e b e q u a l i t y a t t r i b u t a b l e t o t h e human c a p i c a l variables. The c o n t r i b u t i o n s of c o t a l e m p l o p e c t e x p e r i e n c e and of e d u c a t i o n a r e reduced t o minor p r o p o r t i c s by t h e i n t r o d u c t i o n of t h e i n t e r a c t i o n term. F o m a l t r a i n i n g adds n e g l i g i b l y t o t h e d i s p e r s i o n . The r e l a t i o n between t h e s e r e s u l t s on t h e c a u s e s of e a r n i n g s I n e q u a l i t y and our e a r l i e r r e s u l t s on t h e d e t e d n a n t s of e a r n i n g s s t r u c t u r ? i s explored i n t h e concluding section.  Table 10 =LATIE CONT413UTION OF "YZ HU>LiT CAPIT.?& VARIX3LES TO TEI3 VARI.LiC3 0 1 LOG ZX,ZhJI?iC-S P e r c e n t a c e of t h e T o t a l Z:qlzi?.ed V a r i a n c s T h a t is Zx?lal-.ed 3y Selected Variables Using C u r r e n t i'sir.q T o t a l 2nd P r e v i o u s .- \vase 5ng1cy- Nage Exploy- merit Zxge!ri- ment Zx2er i e a c e e z c e 12rx Terns - C u r r e n t engloyment 2 - q e r i e n c e and i t s s q u a r e P r e v i o u s employnent e x 2 e r l t n c e azd i t s s q u a r s 17.3 T o t a l ?rage employnent e - e r i e n c e and i t s s q u a r e Years educaticn P r o d u c t o f e d u c a t i o n and t o t a l . wage enploymen t e x p e r i e a c e Occupation 44.0 35.7' NOTZ: b a s e d on r e g r e s s i c n s e t A. 111. Conclusions Our e c o n o m e t r i c a n a l y s i s o f why wages d i f f e r i n Tanzania's m a n u f a c t u r i n g s e c t o r was p r e f a c e d by a b i p a r t i t e d i v i s i o n of wage d e t e r - m i n a n t s i n t o " s e g n e n t a t i o n " and " h m a n c a p i t a l " v a r i a b l e s . The f o r a e r a r e g e n e r a l l y r e g a r d e d a s q u a n t i f y i n g t h o s e c h a r a c t e r i s t i c s of x o r k e r s and of t h e f i r m s by x h i c h t h e y a r e e a p l o y e d t h a t do n o t a f f e c t i n d i v i d u a l pro- d u c t i v i t y , t h e l a t t e r a s measures o f c h a r a c t e r i s t i c s t h a t a r e productive. l n t h i s s e c t i o n we summarize o u r f i n d i n g s on t h e i n f l u e n c e of t h e c h a r a c - t e r i s t i c s w i t h i n t h e s e c a t e g o r i e s o n :he s t r u c t u r e of e a r n i n g s and o n t h e i n e q u a l i t y of pay. We a l s o c o n s i d e r t h e e x t e n t t o which o u r s e g n e n t a t i o n / human c a p i t a l c a t e g o r i z a t i o n d o e s i n d e e d c o r r e s p o n d t o t h e u n p r o d u c t i v e / productive d i s t i n c t i o n . F i n a l l y , we a d d r e s s t h e £undamental p o l i c y i s s u e r a i s e d by t h i s c a t e g o r i z a t i o n : what s c o p e i s t h e r e f o r r e d u c i n g i n e q u a l i t y o f pay w i t h o u t h a v i n g t o s a c r i f i c e e f f i c i e n c y i n t h e a l l o c a t i o n and t r a i n i n g o f l a b o r , and h e n c e w i t h o u t h a v i n g t o s a c r i f i c e p r o d u c t i o n and i t s growth? The e f f e c t of a c h a r a c t e r i s t i c on wage d i s p e r s i o n may d i f f e r i n i m p o r t a n c e from t h e e f f e c t on v a g e s t r u c t u r e , b e c a u s e i t depends n o t o n l y on t h e s i z e of t h e c o e f f i c i e n t i n t h e e a r n i n g s f u n c t i o n b u t a l s o o n t h e numbe~c o f p a i r - w i s e wage d i f f e r e n c e s t o which t h e c o e f f i c i e n t g i v e s r i s e and on t h e wages, i n r e l a t i o n t o t h e mean, of t h o s e who b e n e f i t from t h e c o e f f i c i e n t . I n t h e c a s e of'a'dummy v a r i a b l e which d i v i d e s t h e sample i n t c two g r o u p s , i n e q u a l i t y i s l i k e l y t o be n o r e s e n s i t i v e t o t h e c o e f f i c i e n t t h e a o r e e q u a l - $ ! e - s i z e of t h e g r o u p s , / L 6 - and t h e g r e a t e r t h e p r o p o r t i o n of those i n the - benefiting g r o u p whose e a r n i n g s exceed t h e s a a p l e mean. - 1/ Xnd t h u s t h e more p a i r - v i s e wage d i f f e r e n c e s e r e a t . - 3 .  We found, i n t h e c a s e o f t h e s e g m e n t a t i o n v a r i a b l e s , t h a t r a c e h a s a b i g , and s e x a s m a l l , e f f e c t on b o t h t h e s t r u c t u r a and t h e d i s p e r s i o n of wages. I n marked c o n t r a s t t o t h e o t h e r , a l a o s t e x c l u s i v e l y i n d u s t r i a l i z e d , c o u n t r i e s where s e x d i f f e r e n c e s i n e a r n i n g s have been a n a l y z e d , i n T a n z a n i a t h e d i f f e r e n c e i s a l m o s t e n t i r e l y e x p l a i n e d by d i f f e r e n c e s i n e c o n c n i c characteristics. D e s p i t e t h e v i g o r w i t h which t h e T a n z a n i a n government h a s a t t e m p t e d t o r e d r e s s t h e r a c i a l i n e q u i t i e s o f che c o l o n i a l e r a , A s i a n s a r e found t o e a r n a n e t prenium i n e x c e s s o f t h e m e a l wage o f X f r i c a n s . The l e s s o n a p p e a r s t o be t h a t i t i s e a s i e r t o p r e v e n t t h e e n e r g e n c e of d i s c r i n i n a - t i o n , women b e i n g o n l y r e c e n t e n t r a n t s t o wage employment, t h a n t o e r o d e long-standing a r b i t r a r y advantages. The s m a l l c o e f f i c i e n t on s e x i s s u f f i c i e n t t o e x p l a i n i t s s m a l l c o n t r i b u t i o n t o t h e i n e q c l l i t y o f pay. Discrimination by r a c e i n c r e a s e s i n e q u a l i t y s u b s t a n t i a l l y d e s p i t e t h e r e l a t i v e l y s m a l l s i z e oE t h e b e n e f i t i n g g r o u p b e c a u s e t h e r a c i a l premium i s l a r g e and n o n - k - r i c a n s a r e a l n o s t a l l h i g h l y p a i d e v e n i n t h e a b s e n c e of t h e p r e m i m . The e f f e c t s o n wage s t r u c t u r e of s e g m e n t a t i o n by employment s t a t u s and s e g m e n t a t i o n among f i m s a r e s u b s t a n t i a l , b u t t h e i r c o n t r i b u t i o n t o t h e o v e r a l l i n e q u a l i t y o f pay i s s m a l l . The s m a l l p r o p o r t i o n o f manual w o r k e r s who a r e c a s u a l s , a n d t h u s i n p r a c t i c e n o t p r o t e c t e d by t h e minimum wage, a r e a t a d i s t i n c t wage d i s a d v a n t a g e , a s a r e v o r k e r s employed i n some f i m s . ' * P a r t i c u l a r e x p l a n a t i m s o f such i n t e r - f i r m d i f f e r k n t l i a l s do n o t . c o n t r i b u t e much. F o r e i g n f i r m s pay o n l y a m a l l premium o v e r A o c a l l y owned p r i v a t e - f irms, though o u r f i n d i n g t h a t pa& t a t a l e n t e r p r i s e s paid t h e l a r g e s t 6 premium may b e e x p l a i n e d by t h e i r ~ r e v i o u s l yb e i n g foreign-owned and t h e * s h o r t c i n e be* ,een n a t i o n a l i z a t i o ~ a n dour s u r v e y . The d e g r e e of u n i o n i z a - t i o n i s a c t u a l l y n e g a t i v e l y r e l a t e d t o wages, s u g g e s t i n g t h a t i n T a n z a n i a u n i o n s a r e b e t t e r d e p i c t e d by t h e ' g o v e r m e n t control' t h a n by :he 'countervailing ?over' nodel. I f t h e r e i s no upward p r e s s u r e on wages, t h e r e i s no r e a s o n why f i n s a b l e t o pay more s h o u l d do s o u n l e s s t h e y t h e n s e l v e s would b e n e f i t ; h e n c e t h e i n s i g n i f i c a n c e o f v a r i a b l e s measuring t h e a b i l i t y t o pay. bployrnent s c a t u s adds l i t t l e t o t h e o v e r a l l i n e q u a l i t y o f pay b e c a u s e t h e r e g u l a r m p l o y e e s r e c e i v i n g t h e aremiurn a r e s p r e a d b o t h below and above t h e n e a n l e v e l of wages. S i n i l a r l y t h e c o n t r i b u t i o n of f i n o f s m p l o p e n t t o i n e q u a l i t y i s s m a l l b e c a u s e t h e few x o r k e r s t o whoa f i n a f f i l i a t i o n a a t t e r s a g r e a t d e a l are w i d e l y s p r e a d o v e r t h e pay d i s t r i b u t i o n . I n one i n s t a n c e i t w a s p o s s i b l e t o p r o b e w h e t h e r t h e premium asso- ciaced v i t h a segmentation v a r i a b l e d i d i n f a c t r e p r e s e n t productivity: our p r o b i n g r e i n f o r c e d t h e e v i d e n c e t h a t non--1cricans a r e t h e b e n e f i c i a r i e s o f discriaination. Even assuming t h a t t h e c o e f f i c i e n t s o n o u r o t h e r s e g a e n t a i i o n variable: a r e s i m i l a r l y i n d e p e n d e n t of p r o d u c t i v i t y , t h i s g r o u p i n t o t a l a c c o u n t s f o r o n l y 37 p e r c e n t o f t h e e x p l a i n e d v a r i a n c e o f wages, l e a v i n g 63 2 e r c e n t t o b e e x 9 l a i n e d by t h e v a r i a b l e s we have a n a l y z e d u n d e r t h e h e a d i n g "human c a p i t a l " . The s t r u c t u r e of wages p r o v i d e s s t r o n g i n c e n t i v e s f o r ~ o r k e r st o r e m a i n i n wage employ.sent. E a r n i n g s i n c r e a s e markedly u i i h employment e x p e r i e n c e ; s o a l s o do t h e r e t u r n s t o f o r n a l t r a i n i n g . Because t h e r e t u r z s t o e x p e r i e n c e i n c u r r e n t eaployment a r e h i g h e r t h a n t h o s e t o p r e v i o u s , , employment e x p e r i e n c e , t h e r e i s a l s o a n i n c e n t i v e t o remain w i t h t h e employer. T h e s e i n c e n t i v e s h a v e c o n t r i b u t e d t o t h e s t a b i l i z a t i o n of T a n G n i a ' s wage 'r - - i l a b o r f o r s e and t o low r a t e s o f i n t e r - f i r s n o b i l i t y . That has p e m i t t e d t h e - p o s t - s c h o ~ l a c q u i s i t i o n and a p p l i c a t i o n o f b o t h genera: - and f *-specif ic s k i l l s which o n l y a q u a r t e r o f a c e n t u r y ago were d e t e r r e d o r d i s s i p a t e d by t h e p r e v a i l i n g system o f s h o r t - t o m c i r c u l a r n i g r a t i o n .  h%ereas t h e c o e f f i c i e n t on c u r m t ~lmr\loyaent e x p e r i e n c e i s l a r g e r t h a n t h a t on p r e v i o u s = ? l o p e n t e x p e r i e n c e , t h e l a t t e r nakes a g r e a t e r c o n t r i b u t i o n t o t h e i n e q u a l i t y o f pay. The r e a s o n i s :hat chose - d t h p r i o r e n p l o p e n t e x p e r i e n c e a r e d i s p r o p o r t i o l n a t e l y found i n t h e h i g h e r paying o c c u b a t i o n s : t h o s e q u a l i f i e d f o r b e t t e r jobs a r e a o r e n o b i l s and I l i k e l y t o have both h i g h e r pay and =ore y e a r s i n p r e v i o u s employment. of e d u c a t i o n and y e a r s o f t o t a l wage enployment e x p e r i e n c e e a c h have Years s u b s t a n t i a l e f f e c t s on both t h e s t r u c t u r e and d i s p e r s i o n of wages. However, t h e independent e f f e c t s o f t h e s e v a r i a b l e s a r e g r e a t l y reduced i n both r e s , > e c t s when t h e i r produc: t e n i s introduced. Occupation p l a y s a v e r y i m p o r t a n t r o l e i n t h e d e t e r i d n a r i o n of wages, and we have s e e n t h a t occupa- t i o n and t h e education-experience i n t e r a c t i o n t e h between t h Q account f o r 1 two-thirds of t h e v a r i a n c e i n wages t h a t i s e x p l a i n e d by o u r "human c a p i t a l " 1 variables. .Bow . a r e t h e s e tvo v a r i a b l e s t o be e x p l a i n e d ? 1 A t one extreme, t h e y c0uJ.d be i l t e r p r e t e d a s e n t i r e l y r e p r e s e n t i n g human c a p i t a l , e.g., t h e c o e f f i c i e n t s on t h e o c c u p a t i o n durcmy v a r i a b l e s r e p r e s e n t o t h e r v i s e unmeasured human c a p i t a l a c q u i r e d i n t h e job, and t h e i n t e r a c t i o n t e n r e f l e c t s t h e v a l u e of e d u c a t i o n i n t h e p r o c e s s of post-school skill-zcquisition. I n t h a t c a s e 67 p e r c e n t of f h e e x p l a i n e d v a r i a n c e i n wages i s due t o d i f f e r e n c e s i n t h e p r o d u c t i v e c i j a r a c t e r i s t i c s of workers. I f t 6 e o c c u p a t i o n c o e f f i c i e n t s simply r e f l e c t t h e a l & o c a t i o o of t h e more educated workers t o t h e jobs i n which t h e i r e d u c a t i o n i s more v a l u a b l e , t h e i n c l u s i o n of t h e o c c u p a t i o n :ems i n r e g r e s s i o n e q u a t i o n s b i a s e s downwards t h e c o n t r i b u t i o n of e d u c a t i o n t o e ~ r n i n g s : a f t e r a d j u s t m e n t f o r t h i s u s i n g e q u a t i o n 1 o f T a b l e 8 , e a r a i n z s a r k r a i s e d by 9 + 1 p e r c e n t f o r each y e a r of e d u c a t i o n i n s t e a d of by 4.9 2 e r c e n t .  T h e r e i s a t t h e o t h e r e x t r e a e a p e r s p e c t i v e from which t h e two v a r i a b l e s c o u l d be viewed a s n o t r e p r e s e n t i n g h m a n c a p i t a l a t a l l . On t h i s view t h e premiuns a s s o c i a t e d w i t h d i f f e r e n t o c c u p a t i o n s r e p r e s e n t instzitu- t i o n a l f a c t o r s which a t t h e l e a s t d e l a y t h e a d j u s t n e n t of customary d i f f e r e n - t i a l s t o market f o r c e s . The p o s i t i v e i n t e r a c t i o n t e r n between e d u c a t i o n and experience r e f l e c t s decreasing r e t u r z s t o education f o r successiv= cohorts of wage l a b o r d a r k e t e n t r a n t s , a s a consequence of r a p i d e d n s a t i o n a l expansion and f i l t e r i n g - d o w n i n t h e f a c t of such i n s t i t u t i o n a l r i g i d i t i e s . I n t:hat c a s e o n l y a t h i r d of t h e s o n t r i h u t i o n of t h e human c a p i t a l v a r i a b l e s t o i n e q u a l i t y of pay i s i n f a c t a t t r i b u t a b l e t o h m a n c a p i t a l , and - from equation 2 i n Table 8 - t h e r e t u r n s t o ( c h e diean v a l u e ) o f e x p e r i e n c e a r e o n l y 2.5 p e r c e n t i n s t e a d o f 4.8 p e r c e n t p e r annum. I n s o f a r as t h i s view i s c o r r e c t , t h e r e a r e a l s o i m p o r t a n t h p l i c a t i o n s f o r t h e e s t i i n a t i o n of t h e p r , i v a t e and s o c i a l r e t u r n s t o e d u c a t i o n : t h e c o n v e n t i o n a l method o v e r s t a t e s t h e marginal returns. On one extreme view, o n l y a t h i r d df t h e e x p l a i n e d e a r n i n g s in- e q u a l i t y i s due t o f a c t o r s which a r e unxecessary f o r a l l o c a t i v e e f f i c i e n c y ; on t h e o t h e r , t h e p r o p o r t i o n i s f o u r - f i f t h s . The i n t e r p r e t a t i o n of t h e o c c u p a t i o n t e r n s and t h e education-experience i n t e r a c t i o n +isms i s t h e r e f o r e c r u c i a l t o a n assessment of t h e p o l i s y trade-off between e a r n i n g s i n e q u a l i t y r I and p r o d u c t i v e e f f i c i e n s y . We have p r e s e n t e d e v i d e n c e and argument i n f a v o r of each i n t e r p r e t a t i o n , and so by i m p l 4 c a t i o n a g a i n s t e i t h e r extreme; b u t a cloud of u n c e r t a i n t y r m a i n s . A n a l y s i s of a s i n g l e c r o s s - s e c t i o n d a t a - s o u r c e cannot y i e l d a p r e c i s e ansFer because i t i s e s s e n t i a l l y s t a t i c r h e r e a s t h e key phenomenon i n q u e s t i o n , e d u c a t i o n a l expansion, i s dynamic. . Deeper imderstdnding of t h e process of l a b o r market adjustment t o educational expansio o b s e r v a t i o n over time o r a c r o s s c o u n t r i e s , of d i f f e r e n c e s y u i r ~ s i n the r e l a t i v e s ~ p p l i e s of educated labor./; - - * 1/ - The a u t h o r s a r e c u r r e p a y engaged w i t h o t h e r s i n t h e a n a l y s i s o f d a t a , g e n e r a t e d by surGeys o f t h e i r own d e s i g n , f o r T a n z a n i a and Kenya i n 1380 which a r Z r i g o r o u s l y comparable w i t h t h e 1 9 7 1 s u r v e y - o n which t h i s p a p e r i s * a s e d . .L.nderson, L a s c e l l e s ( 1 9 S O ) , ' 3 a t e s or' 3 e t u r n t o Suman C a p i k a l : A Test G s i ~ g E l S a l v a d o r D a t a ' , Aineric=n Zconomic Xeview, P a p e r s a d P r o c e e d i z g s , 7 0 , 2 , Yay. - k r i q h i , Giovziini ( 1373) , C I z t 2 r n a c i o n a 1C ? r ? o r a t F c n s , Lakor . . i s t o c r a c i e s m d Pc9ncnic Develo_ccer,t F 2 T r c p i c a l X;'r.icz , i x A r r i g h i , G, a2d S a u l , S . 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(1975) , i- ' U n d e r s t a n 6 i n q t h e Zing1o:ment X e l a t i o n : =he A n a l y s i s of I d i o s y n c r a t i c Zxchange' , 3 e l l Z c u r n a l OF ~ c o n o r n i c s , 6 , 1, S u r i n g .  WPU'I;(3N & 3 L- RESOURCES DIVISION DISCUS SIOH PAPERS [A * by t h e n m b e r i n d i c a t e s t h e paper is B a n l c - c o n f i d e n t i a l o r o t h e r w i s e r e s t r i c t e d .I 81-1 Oey A . Yeesoo k , " C e m q r a p h i c Charac t e r i s t i c s o f I n d i v i d u a l s and t h e H e a s u r m e n t o f L i f e t i n e Income". Febrcary 1981. 81-2 S u s a n H. C o c h r a n e , "The E c o n o n i c s o f F e r t i l i t y xLth E x a n p l e s from Asia". February 1981. 81-3 R a s h i d F a r u q e e , " S o c i a l I n f r a s t r u c t u r e and S e r v i c e s i n Z i m b a b ~ e " . February 1331. 81-4* R i c h a r d S a b o t , A . B e r r y , A. H a z l e m o d , J. K n i g h t , J. h i t a g e and X. 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A p r i l 1981. 81-9 Susan 3 . Cochranz, N i r m a l a J o s h i and G l p a n a Xandkant, " F e r t i l i t y A t t i t u d e s and B e h a v i o r i n t h e Yepal T e r a i " . A p r i l 1931. 81-10 J.S. b i g h t and R i c h a r d S a b o t , "The X o l e o f t h e Firm i n Wage . I D e t e r m i n a t i o n : A n c l f z i c a n C a s e Study". A p r i l 1981. @ 81-11 J.B. K n i g h t and R i c h a r d S a b o t , "The R e t u r n s t o E d x a t i o n : Increasing w i t h E x p e r i e n c e o r D e c r e a s i n g w i t h Expansion? >larch 1981. ". 81-12 J.B. Knfght a n d R i c h a r d S a b o t , "From H i g r a n t s t o P r o l e t a r l . n n s : Employment Exper:ence, X o b i l i t y a n d 'Ages i n T a n z a n i a " . - )!arch 1981. 81-13 A . Berry and Richard Sabot, "Unemployment and ~ c o n o n r cDevelopment". A p r i l 1981. 81-14 R a s h i d F a r u q e e and Ethna J o h n s o n , " H e a l t h , N u t r i t i o n and Family P 1 a : l n i r g : X S u r v e y o f E x p e r i m e n t s and S p e c i a l P r o j e c t s t n I n d i a " . A p r i l 19 3 1 . 81-15 F r a n c o i s O r I v e l and Dean T. J a m I s o n , "The Cost-Ef f e c t i v e n e s s o f D f s t a n c e Teaching Prcj e c t s " . Junn 1981 81-16 R i c h a r d S a b o t , "Labor F o r c e G r o k ~ h , Smployment and 5 a r n i n g s i n Egypt: 1966-1968". ?fay 1981. 81-17 K.C. Z a c h a r i a h , ".Anomaly o f t h e F e r t i l i t y D e c l i n e i n K e r a l a : Social Development, X g r a r i a n R e f o r n s , o r t h e Family P l a n n i r g Program". May 1981. s 81-18 R i c h a r d S a b o t , A. B e r r y , A. t f a z l e m o d , J . K n i g h t , P. C o l l i e r , J. Armitage, M. B o i s s i s r e , "Education Expansion and Labor >far Adjustment i n Kenya and T a n z a n i a - A a a c l g r o u n d Paper". let Yay 1981. a 81-19 Nancy B i r d s a l l and Oey >!eesook, "Child S c h o o l i ~ g ,Number of C h i l d r e n and I n t e r g e n e r a t i o n a l T r a n s s i s s i o n o f I n e q u a l i t y : X S i m u l a t i o n " . May 1981. 81-20 F r a n c o i s O r i v e l , "The h p a c t o f & r i c u l t u r a l E x t e n s i o n S e r v i c e s : A Xeview o f t h e Lf t e r a t u r e " . J u l y 1981. 81-21 Nancy B i r d s a l l and M. L o u i s e Fox, "Why a l e s E a r n Hore: L o c a t i o n , J o b P r e f e r e n c e s and J o b D i s c r h i n a t i o n b o n g B r a z i l i a n S c h o o l t e a c h e r s " . May 1 9 8 1 . 81-22 A l t h e a H i l l , "The Demographic S i t u t a t i o n i n Sub-Saharan A f r i c a : -1 D i s c u s s i o n Paper". Xay 1981. 81-23* R. S a b o t , A. B e r r y , A. H a z l e w o d , J . K n i g h t , J. h i t a g e , N. B o i s s i e r e "Does t h e Expansion o f E d u c a t i o n Conpress t h e S t r u c t u r e o f Rages and Reduce t h e I n e q u a l i t y o f Pay? A P r e l h i n a r y .Inalysis1'. J u l y 1981. 81-24* Nancy B i r d s a l l and Dean T. Jamison. "Income and O t h e r F a c t o r s I n f l u e n c i n g F e r t i l i t y and H o r t a l i t y i n China". Forthcoming. .-. 81-25* Nancy B i r d s a l l , S u l e b a P a t e 1 and K. C. Z a c h a r i a h , " ~ l t e r ~ a t i v e Proj e c t i o n s of t h e Chinese Population". J u n e 1981. 81-26* T.J. Ho, Dean T. J a n l a o n , t a n d P.L. T r o ~ + r i d g e . " F o o d . X v a f l a b i l i t y and t h e N u t r i t i o n a l S t a t u s o f C h i l d r e n i n China". Forthcoming. 81~27.k Dean T. J a y i s o n . "Child H a l n u t r i t i o n and School R e t a r d a t i o n i n China". Forthcodng 'a5 . r 6 81-2 8 Deborah Lh_ason Y a c n i l l a n . "Larg uag e P o l i c i e s f o r Afr Lcan Primary Educaticm: Sunmary o f t h e Anglophone Research L i t e r a t u r e . " J u l y 1931. !e 81-29 T a n i a ~ h e v G n i n . "Les I n p l i c a t t o n s Fedagogiques d e s P o l i t i q u e s d e l a n g u e s d a n s l ' e n s e i g n e n e n t e n X f r i q u e : Une r e v u e d e l a l i t t e r a t u r e Francophone". J u n e 1981. Also a v a i l a b l e i n E n g l i s h a s "Ped2gogical I m p l i c a t i o n s o f Language P o l i c y i n A f r t c a n Schools: X Review. o f t h e Francophone L i t e r a t u r e " .  81-30 V i c e n t e Paqueo. "A Household P r o d u c t t o n Yodel of School Enrollment: A P r o b i t A n a l y s i s of t h e 1978 B i c o l X u l t i p u r p o s e Survey Dhca". June 1981 81-31 3 r y a n L. B o u l i e r and V i c e n t e 3. ?aqueo. "On t h e Theory and > ! e a s u r e ~ e n t s of t h e Determinants of :!ortality". Juae 1951 # 81-32 Reynaldo ?!artorell. " N u t r i t i o n and H e a l t h S t a t u s I n d i c a t o r s : S u g g e s t i o n s f o r Surveys of t h e S t a n d a r d of Living i n Devel.oping I 81-33* R. Countries". J u n e 1981. S a b o t , A . B e r r y , A. iiazelkood, J. Knight, J. Armitage, and 3 . a o i s s i e r e . " C o r r e l a t e s o f E d u c a t i o n a l Attainment i n Tanzznia". J u l y 1981. 81-34 S u s a n 8.- Cochrane. "The D e t e m i ~ a n t sor' F e r t i l i t y and C h i l d S u r v i v a l i n t h e Xepal T e r a i " . J u l y 1981. 81-35 J o a n n e L e s l i e , 3 . G . S a i d y a , and i (. X a n d ~ a n i . " P r e v a l e n c e and C o r r e l a t e s or' Childhood X a l n u t r i t i o a i n t h e T e r a i Region of Xepal". J u l y 1981. 81-36 R. X a n s e l l P r o t h e r o . " P e r s ? e c t i v e s o n P o p u l a t i o n Y c b i l i t y i n West Africa". A q u s c 1981. 81-37 Timothy King. " ? o p u l a t i o n Growth, I n t e r n a t i o n a l Resource Trans:ers, and I a t e r n a t i o n a l H i g r a t i o n " . August 1 9 8 1 81-38 Tizlothy King. "Immigration from D e v e l o p i q C o u n t r i e s : Some Philosophical Issuzs" August 1981.. 81-39 R. S a b o t and J . -Knight. 'kii-.y Wages D i f f e r : Z a r n i n g s F u n c t i o n s i n a Poor Urban Ecoccmy". August 1981. -.