Skill formation and job matching effects in wage growth in Ethiopia

This paper analyses production and labour market data on manufacturing firms in Ethiopia in order to test for skill formation and job-matching effects in wage growth. Estimated age and job seniority profiles of relative marginal productivity and relative wages indicate that both on-the-job skill formation and job matching are significant sources of the growth of productivity and wages with time in the labour market. However, there is also evidence that job matching is by far the more important of the two sources.