Working toward Better Pay: Earnings Dynamics in Ghana and Tanzania by Paolo Falco; Andrew Kerr; Pierella Paci; Bob Rijkers

Author:Paolo Falco; Andrew Kerr; Pierella Paci; Bob Rijkers
Language: eng
Format: epub
Publisher: The World Bank

Source: World Bank; values arrived at using the Tanzanian and Ghanaian UPSs.

Note: Standard errors are in parenthesis. L. indicates a lagged variable whilst Δ indicates a change in a variable between current and previous time period.

***p<0.01   **p<0.05   *p<0.1

The findings for wage workers are more encouraging, at least in Ghana, where education and its square are jointly strongly correlated with educational attainment, suggesting a convex relationship between earnings growth and education. This means that at low levels of education, an additional year of education decelerates earnings growth, but beyond secondary school, earnings grow progressively more with each additional year of education. On the other hand, earnings growth is negatively correlated with cognitive skills, a finding which is difficult to explain. Doing an apprenticeship is again associated with much higher earnings growth during the apprenticeship, and a significant spike in earnings after graduation, but having completed an apprenticeship does not lead to sustained higher earnings growth. Increasing hours worked and moving to a larger firm are also strongly correlated with earnings growth, and individuals who move from wage employment to self-employment tend to experience an increase in earnings that exceeds the benefits of moving to the public sector.

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