• Jobs of the World
  • Mentoring Programme
  • Login for Grantees
  • Code of Conduct
  • About
    • History
    • Investigators
    • Team
  • Projects
    • GLM|LIC
      • Agricultural Labour Markets
      • Gender and Employment
      • Labour Markets in Low-Income Countries
      • Migration
      • Skill Training
    • G²LM|LIC
      • Fact & Policy
      • Fertility & Labour markets
      • Barriers to gender parity
      • The Future of Work
      • Policies & Welfare
    • COVID-19
  • Publications
    • Policy Briefs
    • Synthesis Papers
    • Working Papers
    • Published Articles
    • Book
    • Datasets
  • Events
  • For Policy Makers
Search
  • Skip to main content
  • Skip to primary sidebar
GLM|LIC Working Paper No. 45

Wage Growth and Social Security Reform

Labour Markets in Low-Income Countries
Social Insurance and Labour Market Outcomes in Ethiopia

This paper uses worker-level panel data to examine the wage-shifting effects of a social security reform in Ethiopia. By relying on differences across firms in the existence of pre-reform provident funds, voluntary schemes that provide lump sum payouts to workers upon separation, we test whether employers have shifted to workers’ wages the cost of social security contributions. We find no evidence of such shifting as wages continued to rise significantly after the reform. However, we find that wage growth was substantially slower among employees of firms without provident funds after controlling for standard wage determinants. We also find that this reduction in wage growth affected only less-educated workers with no effect on more-educated workers. The paper also shows rising wage inequality at the lower-end of the distribution driven primarily by rising lower-tail inequality among employees of firms without provident funds.

GLM|LIC Working Paper No. 45

Wage Growth and Social Security Reform

  • Admasu Shiferaw
  • Måns Söderbom
  • Arjun S. Bedi
  • Getnet Alemu
Download the PDF

sidebar

Subscribe to our mailing list
Contact us
Follow us on Bluesky
Follow us on X

Established in 1998 in Bonn, Germany, IZA is an independent, non-profit research institution supported by the Deutsche Post Foundation with a focus on the analysis of global labour markets. It operates an international network of about 1,500 economists and researchers spanning across more than 50 countries.

Based on academic excellence and an ambitious publication strategy, IZA serves as a place of communication between academic science and political practice.

The Foreign, Commonwealth & Development Office (FCDO) leads the UK's work to end extreme poverty. We're ending the need for aid by creating jobs, unlocking the potential of girls and women, and helping to save lives when humanitarian emergencies hit.

FCDO is a ministerial department, supported by 12 agencies and public bodies.

© 2012–2025 | IZA – Institute of Labor Economics | Code of Conduct | Imprint