Multidimensional Human Capital, Wages and Endogenous Employment Status in Ghana

32 Pages Posted: 19 Jan 2009

See all articles by Niels-Hugo Blunch

Niels-Hugo Blunch

Washington and Lee University; IZA Institute of Labor Economics

Abstract

Previous studies of labor market outcomes such as employment and wages have mostly been limited to investigating the impact of formal schooling only and, as a consequence, have seldom considered skills or alternative routes to acquiring skills, such as adult literacy programs, or other types of education. This paper examines these issues for Ghana, by estimating the joint effects of formal schooling, literacy and numeracy skills, and adult literacy programs on employment and wage outcomes. Wage and employment status equations are estimated jointly, allowing employment status to be endogenous. Substantial returns to basic cognitive skills are established, while the education system - especially the lower levels of formal education - is found to be relatively successful in creating these skills. At the same time the results hint at there being substantial returns to skills other than basic literacy and numeracy. These skills appear to be produced mostly from technical and vocational education and training and at higher levels of formal education. Adult literacy participants are less likely to be economically inactive and more likely to be self-employed, hinting at the income-generating activities component of these programs having indirect effects on wages through its effect on labor market participation, especially for females, individuals with no formal education, and in urban areas.

Keywords: wage equations, employment status, human capital, literacy and numeracy, cognitive and non-cognitive skills, formal education, adult literacy programs, Ghana

JEL Classification: I31, J24, O15

Suggested Citation

Blunch, Niels-Hugo, Multidimensional Human Capital, Wages and Endogenous Employment Status in Ghana. IZA Discussion Paper No. 3906, Available at SSRN: https://ssrn.com/abstract=1329544

Niels-Hugo Blunch (Contact Author)

Washington and Lee University ( email )

Department of Economics
Lexington, VA 24450
United States

HOME PAGE: http://www.wlu.edu/williams-school/economics/faculty-and-staff/profile?ID=x258

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

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