Jobs, skills and incomes in Ghana: How was poverty halved?

Abstract

On the basis of official statistics, poverty has halved in Ghana over the period from 1991 to 2005. Our objective in this paper is to assess how far this fall was linked to the creation of better paying jobs and the increase in education. We find that earnings rose rapidly in the period from 1998 to 2005, by 64% for men and by 55% for women. While earnings increase rapidly with education, there is no evidence that the increase in earnings that occurred over the period from 1998 to 2005 was due to increased returns to education or increased levels of education. In contrast there is very strong evidence, for all levels of education, that the probability of having a public sector job approximately halved over the period from 1991 while the probability of having a job in a small firm increased very substantially. Jobs in total have been increasing in line with the population but the proportion of relatively low paying ones increased markedly from 1998/99 to 2005/06. The rises in income that occurred over this period were due almost entirely to increases in earnings rates across all job types, particularly among the unskilled. Policy over this period has engineered a growth pattern that benefits the poorest and this pattern of rising incomes occurred in a context where low paying employment opportunities have expanded rapidly, whilst the returns on these opportunities have increased substantially. Why unskilled earnings rates rose so rapidly is unclear. © 2012 Taylor & Francis.