Education and Earnings Inequality in Ghana

Abstract

The paper investigates the effects of education on earnings distribution of urban workers in the Ghanaian labour market between 1998/99 and 2005/6 by using the fourth and fifth rounds of the Ghana Living Standards Survey. To this end, quantile regression technique is applied to examine returns to education across the earnings spectrum to identify whether some workers benefit more from education with its implication on earnings inequality. Estimated returns to education along the earnings distribution point to a change in the pattern of returns between 1998/9 and 2004/5 along the earnings spectrum. Results indicate earnings inequalities have widened with education across the two periods. Specifically, in 1998/99, earnings inequality reducing trend of education observed has changed overtime. These results are robust when the labour market is disaggregated by sector.