Task organization, human capital, and wages in Moroccan exporting firms

Abstract

We conduct a case study of the linkages of task organization, human capital accumulation, and wages in Morocco, using matched worker–firm data for electrical–mechanical and textile-clothing industries. In order to integrate task organization into the interacting processes of workers' training and remunerations, we assume a recursive model, which is not rejected by our estimates: task organization influences on-the-job training (OJT) that affects wages. Beyond sector and gender determinants, assignment of workers to tasks and OJT is found to depend on former education and work experience in a broad sense. Meanwhile, participation in OJT is stimulated by being assigned to a team, especially of textile sector and for well-educated workers. Finally, task organization and OJT are found to effect wages.

Keywords:

• Morocco
• wages
• on-the-job training
• human capital
• task organization

Notes

1. The forthcoming data on the new household panel data survey conducted by the Observatoire National du Développement Humain of Rabat are likely to relax this constraint.

2. See, for example, Sahn and Alderman (1988) and Behrman (1999).

3. Nevertheless, the (controversial) official statistics show a drop in the general unemployment rate from 11% to 7.7% between 2005 and 2006.

4. 147 US dollars of 2001.

5. In the industrial sector, the annual average wage – ratio of mass salary to permanent employment – amounted in 1995 dirhams to 34,963 dirhams, that is 2914 monthly dirhams.

6. See The World Bank (1994). Females are more likely than males to be paid a wage below the SMIG.

7. Workers are considered permanent when they can justify more than a year of job seniority.

8. High welfare costs in the formal private sector (from 21.7% to 35% of gross wage) increased the cost of permanent workers and deterred firms of the informal sector of joining the formal economy.

9. The methodology of the Moroccan survey is further described in Nordman (2000) and Destré and Nordman (2002). Definitions and descriptive statistics of the variables used in this paper are in Tables 1 and 2 in the Appendix.

10. The survey was designed to concentrate on Moroccan exporting firms, i.e. firms belonging to the formal manufacturing sector of the Moroccan economy. The survey purpose was to investigate the conditions under which employees' workplace learning occurs and its association with the firms' organizational features. Therefore, firms with too few salaries were excluded from the investigation.

11. Angrist and Lavy (1997) estimate the number of repeated classes at 2–3 years in Morocco. In our survey, this number is about 4 years and is calculated from the highest school certificate or diploma and the age at the end of studies.

12. See on this point Behrman and Birdsall (1983).

13. The average monthly wage corresponds to 1.6 times the minimum wage (SMIG). The declared monthly wages are those of May and March 1997 for 90% of the sample and of December 1999 for the rest.

14. See Bougroum and Ibourk (1998) for discussions related to the reservation wage in Morocco.

15. While X_1i contains the usual covariates present in Mincer-type wage regressions, such as education, experience, and training variables, X_2i also includes sociodemographic characteristics not present in X_1i (for example, the number of dependent children, marital status, and geographic origin such as rural or urban) that can be used to identify the reservation wage. As usual, we assume that . Gaussian error is a usual assumption shared with many methods for correction of self-selection in wage equations. The credibility of this assumption is enhanced by the introduction of a dummy for the proximity to the minimum wage that contributes to redressing irregularities in the lower tail of the error distribution. In this model, the first two truncated centered moments for the first equation can be written as where c₂ = b₂. Clearly, the generalized inverse Mills ratio (f/F) in the first moment equation cannot be exactly estimated since the nonparticipants are not observed in our data. However, since X_2i includes the number of dependent children (enft), we can use this variable to detect if selectivity affects wage estimation. The role of enft in determining the generalized inverse Mills ratio is approximated by a polynomial of degree 5 in enft. Fisher's tests of the joint significance of Powers of enft of order 1–5 are implemented from the results of quasi-generalized least squares estimation, which are shown in Section 5.3.

16. Another possible specification could have been to specify an ordered probit by considering that the tasks are ordered according to increasing skills: production line, then work team, then supervisor. However, this is not the chosen approach for two reasons. First, there is no necessary ordering between these tasks. For example, some teamwork, such as cleaning jobs in a factory, are not more skill-intensive than production line works. Second, the multinomial specification we use should broadly encompass an ordered specification. In that case, the ordered structure would somewhat be captured by the estimated coefficients of the multinomial model, which does not occur in our estimates. In particular, an ordered model would lead to rejection of the hypothesis of the independence of irrelevant alternatives, which is not the case in these data, as we discuss below.

17. Because of the small sample size, we avoid interacting the gender dummy with other coefficients in order to preserve degrees of freedom. Besides, we checked that incorporating many interacted terms only yielded more insignificant coefficients.

18. Note that crossed effects of human capital with task organization variables are insignificant in the tobit model of OJT duration. Then, while OJT probability varies according to the workers' human capital and assigned task, their OJT duration does not.

19. We also considered introducing years of schooling and off-firm experience in a nonlinear fashion (adding squared terms) but obtained insignificant results.

20. See Nordman (2004) for gender issues with these data and more broadly Nordman and Wolff (2009) for gender issues in the Moroccan manufacturing sector.

21. As in Bresnahan, Brynjolfsson, and Hitt (2002).