Appendix Ghana

growth spell total growth over this periodmean annual per capita

growth over over this period

1984-2000 107% 2%

1984-1992 49% 2%1992-2000 39% 2%

Conclusionper capita growth is accompanied by• an increase in output per worker in the primary and

tertiary sectors• a decrease in output per worker in the secondary

sector in recent years• an increase in employment share of the working

age population in the secondary and tertiary sectors

• a decrease in employment share of the working age population in the primary sector

Further work

• Use household data to further analyze the link between growth and poverty– How have these changes in sectors affected poverty in

each sector

– How have earnings changed?– How has labor force participation changed? – What is the role of mobility across sectors?

1998/99 poor non-poor

primary sector 78% 45%secondary sector 7% 12%tertiary sector 16% 53%

100% 100%

• Institutions

• Segmentation– Oaxaca– Prob of having bad job

• Skills profile and mismatch

• Labor demand

Conclusion1. Per capita growth is accompanied by

- an increase in output per worker

- a decrease in dependency ratio

- a decrease in employment share of the working age population

2. There are important differences between sectors and across growth spells

Appendix Nicaragua

Linking employment and productivity growth with poverty

• Regression approach

• Sectoral decomposition approach

tt

s

iitiit

s

iit XeP

11

lnlnln

S

ititi

titititi

S

i

titi NNPP

PPNN

P1

1,2,2,1,

1,2,1

2,1,

22

• Changes in average per capita household labor income

• Groups can be defined by decile, or employment status (waged, self employed etc) or poor and non poor.

j j

jj

jj

jj

jjj

Lj a

Nl

Nu

Nh

NNNln

1ln

1)1ln(

1ln

1ln

1ln

1

Labor income profile of the population

• Decomposing changes in per capita household labor income

• The average per capita labor income of the subset Ω of households

1 1(1 )L

i j j j j jj j

h u l aN N

j

j

j

j

j

j

j

j

j

Lj

j

Lj

N

A

A

L

L

E

E

H

H

I

N

I

jjjjjLj aluh )1(

Segmentation and mismatch, labor supply, and labor demand

• Segmentation: Which are the prevailing institutional wage setting mechanisms? How important are wage differentials between different segments of the labor market? Is there any evidence of segmentation?

• Labor Supply and mismatch of skills: What is the structure of the labor force? Is there any evidence of skill mismatch?

• Labor demand: How does unskilled labor respond to the cost of labor, the price of other inputs and total demand? Is there any stickiness in the adjustment process of employment to changes in demand?

Segmentation

• Describe the institutional wage setting mechanisms

• Estimate earnings functions for 5 different segments of the labor market (suggested segments)– Private wage workers in formal sector– Private wage workers in the informal sector– Public wage workers– Self employed with paid employees– Self employed with no paid employees– Family enterprise workers

Estimate differences in returns to individual characteristics

• Perform and Oaxaca-Blinder decomposition to determine what fraction of wage differentials within two segments are due to differences in returns:

ln ln ( ) ( )j s j j s j s sX X X

Labor supply and mismatch

• Long run trends in the labor force profile of the population by skill level, urban/rural and gender.

• Analyze mismatch of skills, several indicators.

Labor demand estimation

• Static labor demand (Generalized Leontief)

• Own wage elasticitity

• Elasticity of substitution

• Output elasticity

jiti

it

jtij

t

it TYp

pb

Y

X

2/1

i

ij i

jij

ii X

p

pbY

2

2/1

j

i

jij

iij s

p

pb

X

Y2/1

2

i

ii X

Y 2

1