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New study on employment in African firms

Posted By Guy Pfeffermann, Wednesday, February 05, 2014
Guy PfeffermannThis brand-new study by the Center for Global Development shows that ceteris paribus, African firms employ fewer people than similar firms elsewhere. The authors say that they can only explain 40 percent of the difference, but suggest that one of the factors involved in the remaining 60 % has to do with quality of management:

"Recent research by Bloom et al suggests that management capacity is an important variable
of firm productivity (Bloom et al, 2013; Bloom and Van Reenen, 2007). Unfortunately the
firm-level data do not include sufficient data on this variable to include it in the analysis--the
closest proxy is foreign ownership, which is known to imply higher levels of management
capacity, among other things. However, combining the importance of management with the
above-mentioned result on worker skills might suggest that employment growth is highest
when more skilled management coincides with a large supply of less skilled workers. This
hypothesis must be explored further."
Guy Pfeffermann is the CEO and founder of the Global Business School Network.

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