MARKET POWER, FIRM PERFORMANCE AND REAL WAGE GROWTH IN ZIMBABWEAN MANUFACTURING

This paper uses a two year panel of data on 600 Zimbabwean manufacturi ng workers and the employers to examine several aspects of the labor m arket response to the reforms introduced in the 1991 structural adjust ment program. The analysis then uses Ns evidence to explore a number o f hypotheses about the functioning of formal urban labor markets in Zi mbabwe, with particular attention to the issue of rent sharing. First, as one would expect,liberalization of trade did indeed act to shift e mployment from import competing sectors to export sectors, although to tal manufacturing employment was basically unchanged. Second, real wag es in manufacturing fell for most workers. Third, the pattern of wage changes across sectors and firms is consistent with a view of labor ma rkets as noncompetitive. The evidence provides support for the idea th at a rent-sharing process of wage determination, rather than one based on efficiency wages or government intervention, is an appropriate cha racterization of this labor market. (C) 1997 Elsevier Science Ltd.