Role of Firms in Wage Dispersion: Evidence from a developing country

Working Paper
Published on 1 April 2022


This paper aims to extend our knowledge of wage dispersion to developing countries. For this purpose, we built the first matched employer-employee database in a sub-Saharan African country (Senegal). Using the traditional two fixed effects model (a.k.a AKM), we find that firms explain 28.3% of the wage dispersion for Senegalese men sample and 28.6% for Senegalese female sample. The share of the variance explained by firms is much larger in Senegal than what the literature documented for High-Income countries Card et al. (2018).


Yaya Diallo

McGill University

Ibrahima Sarr

Université Laval

Idrissa Diagne

Université Laval