**18**

about one-half of the percentage change in the minimum wage (positive or negative, nominal or real) in Rio de Janiero was passed through to the median wage. In Chile, changes in the minimum wage were "probably important" in affecting average wages and the level of employment of unskilled workers (Riveros 1990:17). In contrast, the ILO (1990:24) found no statistical relationship between changes in the re.d minimum wage and lagged changes in real average manufacturing earnings for six African and eight Latin American countries. The answer to a second question -- whether the minimum wage is a disincentive to human resource development, and therefore has indirect labor market effects -- is clearer. There is substantial evidence, not reviewed here, to this effect.<sup>17</sup> On the general issue of incentives for skills acquisition, the ILO found no evidence of narrower pay differentials for skills in industrial relative to developed countries. Indeed, for many of eleven technical and skilled occupations, the pay differential ru.lative to a construction worker was often wider in developing countries (ILO 1990:20).'8 Thus, the wage compression evident in the civil service of many countries has not had spillover effects on the private formal economy; rather, the gap between public and private at higher skill levels has widened. The ILO notes that no normative conclusions can be drawn from these data about differentials in any county being too low or too high, merely that there is no across-the-board relationship of pay levels that would by itself point to disincentives for skills training in developing countries.

The ILO study did not differentiate among public and private pay. However, Heller and Tait's study (1984) of public sector wage differentials also found few commonalities at the start of the 1980s. The standard deviation of wages across public sector positions relative to a clerical wage (= 100) varied widely in 1980 across a selection of countries. It was rather high (120 to 135) in some African and Caribbean countries. In the most extreme case (Kenya), the wage index was 117, for nurses relative to clerical workers 708 for doctors, 164 for primary school teachers and 449 for secondary school teachers, yielding a standard deviation in Kenya of 208 -- exceeded only by Trinidad and Tobago (Heller and Tait 1984:49). Although the data do not point to any consistent pattern of wage compression, even by region, they do highlight differences in the returns to skills acquisition. The impression is one of wages administered in accordance with political economy criteria as much as by any assessment of the market return to different skills. Furthermore, these data were collected before the fiscal crunches of the 1980s, so the significant wage compression of the early to mid 1980s would change some of the numbers appreciably.

**The importance of** nonwage **benefits**

There is little consensus and, indeed, a limited empirical literature on the importance of the nonwage component of total compensation in the relationship between government pay and employment policies, on the one hand, and the nongovernmental wage economy on the other. There is much anecdotal evidence about the importance of nonwage benefits, but quantitative studies are few and do not lead to easy cross-county