nep-afr New Economics Papers
on Africa
Issue of 2008‒10‒13
two papers chosen by
Marco Novarese
University Amedeo Avogadro

  1. Sample selection bias and the South African wage function By Cobus Burger
  2. Globalization and Poverty in Senegal: A Worst Case Scenario? By Miet Maertens; Liesbeth Colen; Johan F.M. Swinnen

  1. By: Cobus Burger (Department of Economics, University of Stellenbosch)
    Abstract: Conventional wage analyses suffers from a debilitating ailment: since there are no observable market wages for individuals who do not work, findings are limited to the sample of the population that are employed. Due to the problem of sample selection bias, using this subsample of working individuals to draw conclusions for the entire population will lead to inconsistent estimates. Remedial procedures have been developed to address this issue. Unfortunately, these models strongly rely on the assumed parametric distribution of the unobservable residuals as well as the existence of an exclusion restriction, delivering biased estimates if either of these assumptions is violated. This has given rise to a recent interest in semi-parametric estimation methods that do not make any distributional assumptions and are thus less sensitive to deviations from normality. This paper will investigate a few proposed solutions to the sample selection problem in an attempt to identify the best model of earnings for South African data.
    Keywords: Semiparametric and nonparametric methods; Simulation methods; Truncated and censored models; Labour force and employment, Size, and structure
    JEL: C14 C15 C34 J21
    Date: 2008
  2. By: Miet Maertens; Liesbeth Colen; Johan F.M. Swinnen
    Abstract: There is no consensus about how globalization –trade and foreign investments – affects poverty reduction. Using household survey data, this study contributes to the empirical literature on globalization and poverty by analyzing the household-level implications of increased foreign investments and trade in the horticulture sector in Senegal. In many aspects this represents what many would consider a “worst-case scenario”. Stringent rich country standards are imposed on exports and the supply chain is controlled by a single multinational company with extreme levels of supply base consolidation and vertical integration and complete exclusion of smallholder suppliers. We analyze and quantify income and poverty effects under these “worst-case conditions” and find significant positive welfare impacts through employment creation and labor market participation.
    Keywords: trade, FDI, poverty, vertical coordination, modern supply chains
    JEL: F2 J43 O12 Q12 Q17
    Date: 2008

This nep-afr issue is ©2008 by Marco Novarese. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.