Ghana's labor market (1987-92)

Using the household survey and other data sources, the authors analyze returns to education and other aspects of Ghana's labor market profile from 1987 to 1991. The labor force grew slower than the population did between 1980 and 1990, but the supply of labor is expected to increase as the population of youth is expected to grow faster from 1990 to 2000. And labor force participation rates for 26- to 45-year-olds have been increasing rapidly. Over time, the average labor force participation rates of women have become equal to men's; that of children younger than 15 has remained unchanged at 38 percent. More than half of Ghana's child laborers are employed in agriculture. The formal sector's share of employment is on the decline, while the private informal sector's share has increased, especially in urban areas. Over time, the informal sector (in which most workers have a primary education or less) has absorbed more labor than the formal sector (in which most workers have middle or secondary schooling). Unemployment is pervasive in urban areas, and is less visible in rural areas. Labor productivity may not have increased and is possibly declining. Between 1987 and 1992, there was reverse migration, with many people moving from urban to rural areas, mostly for family reasons. Employment-related migration has also been on the increase. As is true elsewhere, the level of education affects participation in the labor force. Literacy rates for women are lower than those for men, which is one reason men dominate the private formal sector. The rate of return to education increases with higher education and work experience. The return for each additional year of schooling rangesfrom 4 percent to 6 percent in Ghana, quite high for a Sub-Saharan African country. Private and social returns to education are greater for primary than for secondary or postsecondary education.