Working toward Better Pay : Earning Dynamics in Ghana and Tanzania

Abstract

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.