A well-functioning labor market should perform at least two tasks: matching workers with firms and setting wages. The ability of the labor market to allocate workers to firms or industries with the highest productivity or the best future prospects is of particular importance for the likely effect of trade reforms. This chapter provides evidence for three countries in sub-Saharan Africa (Tanzania, Kenya, Zimbabwe) on the extent to which observed wage premiums for a number of worker characteristics are equal to the productivity premiums associated with those same characteristics. It first compares the two premiums at the firm level and then examines five characteristics: gender, labor market experience, education, job tenure with the current employer, and whether a worker has followed a formal training program.