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Working toward Better Pay : Earning Dynamics in Ghana and Tanzania


  • Paolo Falco
  • Andrew Kerr
  • Pierella Paci
  • Bob Rijkers


Improving access to productive employment is a key policy challenge, especially in low-income countries (LICs), where the only asset in abundance is labor. Building on ongoing research on earnings mobility, this study uses unusually rich longitudinal data from Ghana and Tanzania to identify engines of, and barriers to, earnings and earnings mobility. It examines the role of individual characteristics such as gender, age, and skills and characteristics of the job, but it also focuses on the role of job switches for example, moves into and out of self-employment. It zooms in particularly on the drivers of transitions between low-paying and high-paying jobs, and addresses questions such as whether being low paid is a transitory or permanent phenomenon, and whether it has a scarring effect on an individual's employment prospects. The extent to which earnings dynamics differ for women and young adults is also discussed in detail. The cross-country comparison of earnings dynamics and labor market transitions helps shed light on the institutional factors that promote labor market mobility and entrepreneurship. The report is organized as follows: chapter one gives introduction. Chapter two presents a brief review of related literature. Chapter three gives a descriptive overview of the labor markets in the two countries. Chapter four examines the determinants of earnings levels. Chapter five examines determinants of earnings growth. Chapter six focuses on low-pay and high-pay transitions and analyzes whether the experience of being in a low-paying job undermines an individual's future earnings prospects. Chapter seven discusses key policy implications.

Suggested Citation

  • Paolo Falco & Andrew Kerr & Pierella Paci & Bob Rijkers, 2014. "Working toward Better Pay : Earning Dynamics in Ghana and Tanzania," World Bank Publications, The World Bank, number 18553, December.
  • Handle: RePEc:wbk:wbpubs:18553

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    References listed on IDEAS

    1. Måns Söderbom & Francis Teal & Anthony Wambugu & Godius Kahyarara, 2006. "The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(3), pages 261-288, June.
    2. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
    3. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, December.
    4. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
    5. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    6. repec:adr:anecst:y:1999:i:55-56:p:05 is not listed on IDEAS
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    Cited by:

    1. World Bank Group, 2016. "Kenya Country Economic Memorandum," World Bank Other Operational Studies 24008, The World Bank.
    2. World Bank Group, 2016. "Fifth Ethiopia Economic Update," World Bank Other Operational Studies 25747, The World Bank.
    3. Mlacha, Cornel J. & Ndanshau, Michael O.A, 2018. "Education and Labour Earnings Inequality in Tanzania: Evidence from Quantile Regression Analysis," MPRA Paper 89173, University Library of Munich, Germany.


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