We use micro data on manufacturing employees in Kenya and Tanzania to estimate returns to education and investigate the shape of the earnings function in the period 1993-2001. In Kenya, there have been long-run falls in the returns to education while for Tanzania there is evidence of rising returns in the 1990s. The earnings functions are convex for both countries and this result is robust to endogeneity. Convexity may be part of the explanation as to how rapid expansion of education in Africa has generated so little growth if expansion has been concentrated at lower levels of education.
Using the 2018 World Bank enterprise data, this study sought to establish whether the determinants of labor productivity in the Kenyan private service sector varied with the size of the firm. Unlike previous studies that just focus on the determinants of labor productivity among manufacturing firms; this study employed the two-stage switching regressions model to correct for the firm-size effect. The findings revealed that capital intensity, employee wage, high school education, and managers' experience impacted positively and significantly on labor productivity while tax burden and power outages significantly decreased labor productivity across all firms. The differences in the determinants of labor productivity across both firms were, however, found to be negligible and insignificant. With the political uncertainty and tax burden | AMUTABI AND WAMBUGU How to cite this article: Amutabi C, Wambugu A. Determinants of labor productivity among SMEs and large-sized private service firms in Kenya.
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