• Skip to primary navigation
  • Skip to content
  • Skip to primary sidebar
  • Skip to footer

G²LM|LIC

  • About
    • History
    • Investigators
    • Team
  • Projects
    • GLM|LIC
      • Agricultural Labour Markets
      • Gender and Employment
      • Labour Markets in Low-Income Countries
      • Migration
      • Skill Training
    • G²LM|LIC
  • Publications
    • Policy Briefs
    • Synthesis Papers
    • Working Papers
    • Published Articles
    • Datasets
  • Events
  • Evidence Finder
GLM|LIC Synthesis Paper No. 6

What Constrains the Demand for Labour in Firms in Sub-Saharan Africa?

Some Evidence from Ghana

Employment in Ghana’s manufacturing sector remained constant as a share of total employment from 1962 to 2014 at just over 10 per cent. However the share of employment in small scale enterprises, those employing less than 10, doubled in urban areas from 33 to 64 percent of the total. Such enterprises have much lower levels of labour productivity than larger ones. In this paper the possible reasons for this pattern of job expansion in the lower productivity sector are examined by combining census and survey data. It is shown that large firms use a much more capital intensive technology than smaller ones, face lower capital costs and pay higher wages. Possible reasons for these patterns of factor demand and factor prices are examined. Hypotheses that explain higher wages in larger firms include efficiency wages, rent capture, market frictions in search models and a rising labour supply function. Hypotheses that explain lower capital cost include differential access to financial markets and growth for more efficient firms. Matched panel data for workers and firms is available so the role of unobservables can be investigated. Evidence is presented that, conditioning on their efficiency, older firms are not larger. Larger firms face rising labour costs due to a rising supply curve for labour. Such rising costs may well reflect the high returns to physical capital in smaller enterprises.

GLM|LIC Synthesis Paper No. 6

What Constrains the Demand for Labour in Firms in Sub-Saharan Africa? Some Evidence from Ghana

  • Francis Teal
Download the PDF

Primary Sidebar

About Us

IZA and the UK Government Department for International Development (DFID) run the joint IZA/DFID Growth and Labour Markets in Low Income Countries Programme (GLM|LIC), which aims to improve worldwide knowledge on labour market issues in low-income countries (LICs).
Gender focus Starting in mid-2019, the focus will be on gender issues especially. The new programme “Growth, Gender and Labour Markets in Low-Income Countries” (G2LM|LIC) will foster research that aims to guide future gender and labour market policies.

Follow us on Twitter

  • From #rct to #rdd we covered a lot of ground in just two days. Congratulations to students at the @IZAWorldofLabor… https://t.co/amgsyaIPGS December 8, 2019 9:26 am
  • Students show off their research at @IZAWorldofLabor @DFID_UK short course on #programevaluation #causalinference https://t.co/GsCdjFUCcA December 7, 2019 6:33 am
  • @DavidLam_UMich and Marco Caliendo kicking off the @IZAWorldofLabor @DFID_UK short course on #programevaluation… https://t.co/xNiC2udVFK December 7, 2019 2:37 am
Twitter

Footer

IZA Logo

Established in 1998 in Bonn, Germany, IZA is an independent, non-profit research institution supported by the Deutsche Post Foundation with a focus on the analysis of global labour markets. It operates an international network of about 1,500 economists and researchers spanning across more than 50 countries.

Based on academic excellence and an ambitious publication strategy, IZA serves as a place of communication between academic science and political practice.

DFID Logo

The Department of International Development (DFID) leads the UK's work to end extreme poverty. We're ending the need for aid by creating jobs, unlocking the potential of girls and women and helping to save lives when humanitarian emergencies hit.

DFID is a ministerial department, supported by 2 agencies and public bodies.

© 2012–2019 | IZA – Institute of Labor Economics | Imprint