Labor market efficiency in West African Economic and Monetary Union (WAEMU)

First, we use new dataset on the capital cities of the WAEMU countries that combine information on the active population (15 years and more) and their activity to analyze the labor market in those countries. The descriptive analysis suggests that there is high labor force participation which is on average 83.5 percent in WAEMU and higher than the average for Sub-Saharan Africa (74 percent in 2006), high unemployment, a segmented labor market, a narrow formal private sector constituted mainly of full time workers, and workers mainly concentrated in the informal economy. There are also clear indications of heterogeneity by gender in the labor market. Female are in majority unemployed, tend to be less educated, earn less, and are involved in small business activities mainly in the informal sector. Unemployment rate is high among the youngest, the female, and the less educated people. The WAEMU economies are not attractive for investment due in part to rigid employment regulation. During the period of 2006 to 2009, Burkina Faso and Mali have initiated employment reforms that contributed to ameliorate their rankings in the World Bank Doing business analysis. For example, in the area of ease of firing worker, Burkina Faso scores better than Mauritius and Malaysia. In the other WAEMU countries, the existing labor codes offer substantive protection to workers and regulations are too rigid.;Second, we use new dataset on Benin, Mali, and Senegal that combine data on individual and household characteristics to analyze the determinants of the probability of exit from unemployment to employment or the hazard rate.;The results show some similarities between the covered WAEMU countries. Women are less likely to exit out of unemployment than men. The fact of having children less than 10 years of age in the household has a negative impact in the exit out of unemployment for women. Nevertheless, women looking for a job in the informal sector are more likely to exit out of unemployment. They are mainly involved in managing small businesses in the informal sector. In addition, female migrants are more likely to exit out of unemployment than their counterparts' male. Furthermore, marital status seems to have a negative effect on the young exit out of unemployment. Whereas, young exit out of unemployment is positively correlated with migration.;In summary, our results suggest that government policies to reduce unemployment duration in those countries should be directed to individuals with low education level in particular female, young individuals using their relatives and friends to find a job, and some particular groups of migrants (young migrants in Senegal and Benin and migrants aged more than 45 years in Mali). In addition, in Benin, women mainly involved in managing small businesses in the informal sector should be assisted.;Third, we use new datasets that combine detailed demographic information on workers in a sample of manufacturing plants with information on plant-level inputs and outputs in some WAEMU countries (Mali, Benin, and Senegal) to estimate marginal productivity differentials among different types of workers. We then compare these to estimated relative wages, leading to new evidence on productivity based and non productivity-based explanations of the determination of wages. The same task is also performed in selected medium income countries (Mauritius and Malaysia).;The main finding from the analysis is that wage premiums for a number of workers' characteristics do match productivity contributions. In Malaysia, which is the most developed country in our sample, we reject the hypothesis of equality for two worker characteristics. Differences between wage and productivity premiums are related to the following worker characteristics: female and skilled production worker.;Finally, we use new unbalanced panel data of manufacturing firms in Burkina Faso observed over the years 2006 and 2009 to examine the impact of the reform to fixed-term contracts on employment and productivity in this sector. A new Burkina Faso labor code, approved in May 2008, makes hiring workers easier by allowing employers to use fixed-term contracts for permanent tasks, removing the 48-month limit on the duration of such contracts. The results show that the reform has a positive effect on temporary employment which increases by 72 percent, a negative effect on permanent employment which decreases by 15.6 percent, and a negative effect on total employment which decreases by 19 percent. This suggests that firms have substituted permanent workers with temporary workers as the layoff of a permanent worker has also been made easier because third-party notification and consent are no longer required for dismissal of a single worker. Moreover, the positive effect on productivity is large. Productivity of workers has almost double, generating rent for the employers. (Abstract shortened by UMI.)...