Determinants of Urban Worker Earnings in Ghana: The Role of Education

Abstract

The paper examines the role of education in earnings determination by using all three rounds of the Urban Worker Survey of Ghana for 2004-2006 conducted by CSAE. The analysis is begun by investigating and comparing heterogeneity in earnings determinants amongst self-employed (informal sector), private sector workers and public sector workers with particular focus on education. An examination of the role education, individual and household characteristics play in facilitating entry into employment sectors is further undertaken in a multinomial logit model of occupational attainment in addition to analyzing the pattern of returns to education along the earnings distribution. After addressing biases associated with estimating earnings equations, it is observed that education plays an important role in promoting access to lucrative formal sector jobs, especially employment in the public sector but has no direct impact on earnings within the sector.