_L. Fox and A.M. Oviedo_ _Are Skills Rewarded in Sub-Saharan Africa?_ including regulation, which ultimately have an effect on development.<sup>7</sup> In Africa, labor and other regulations vary substantially according to the legal origin of the country; particularly between common-law and civil-law systems (see Figure 2).

Our paper adds to the literature on skills and labor market outcomes in SSA in several ways: first, we use recent matched employer-employee data covering 20 countries in Sub-Saharan Africa. To our knowledge, this is the first study to include such a large number of countries and to use the new Enterprise Surveys collected between 2003 and 2007.<sup>8</sup> Our sample enables us to analyze common patterns in wage-setting mechanisms in manufacturing across much of the continent, with enough confidence that our findings are relevant at the aggregate level. Indeed, the combined manufacturing output in our sample countries equals 44 percent of the total manufacturing output in Sub-Saharan Africa.<sup>9</sup> Second, we split countries according to their legal origin (and thus the source of their Western language use) to analyze wage determination, and in particular how the expansion of the educated labor force has affected returns to education. To this end, we analyze separately across age groups (and legal origins) how skills, captured in different ways, affect wages. In this sense, our paper complements a recent study by Alby (2007), who also looks at differences in wage setting according to legal origin, using Enterprise Survey data for 9 countries. Consistent with the literature, he finds evidence of rent-sharing, and he also finds that unionization has varying affects across both country groups (a result we find as well). However, Alby’s study does not look at how returns to education vary with a worker’s age, something for which we do find strong evidence.

Finally, we investigate how differences in skills (associated with differences in wages) translate into differences in productivity. Following Hellerstein _et al._ (1999) and Van Biesebroeck (2007) we jointly estimate wage and productivity premia for the pooled sample and for each legal origin group. Our results suggest that productivity premia are much lower than their corresponding wage premia, which is consistent with previous findings by Bigsten _et al._ (2000).

The rest of the paper is organized as follows. Section II describes the data. Section III describes institutional differences across countries, as well as differences in firm and worker characteristics in our sample. In particular, we look at differences in skills across common law (Anglophone) and civil law (Francophone) countries. In Section IV we present results of our wage regressions, in Section V we present results of our wage and productivity premia estimations, and we conclude in Section VI.

> 7 See La Porta et al. (1998), Heckman and Pagés (2000), Beck and Levine (2004), and Loayza _et al._ (2005). 8 The data collected under the RPED project covered the early to mid- 1990s. Thereafter, all firm surveys are done under the global Enterprise Surveys project. See <u>www.enterprisesurveys.org.</u> 9  Excluding South Africa.

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