The decline of the wage share in value-added: What have we learned from North African firms?

Abstract

This study, based on a World Bank survey of 5,351 observations in Morocco, Egypt, and Tunisia, offers a detailed analysis of the factors leading to the reduction in the wage share of value added in North African companies. The findings suggest that increased capital and technological advancements, especially in patent adoption, are principal contributors to this decrease. Moreover, the intensification of both local and foreign competition, along with trade liberalization facilitated by offshoring, negatively affects the wage share. However, the influence of privatization and foreign direct investment on this trend is minimal. The research also emphasizes the need to include sectoral variability of large firms in the analysis to fully understand the underlying dynamics.