Essays on trade openness, wage, poverty and intra-household time allocation in Ghana

Abstract

This thesis analyses the interrelationships between trade, poverty, labour market outcomes and household production in Ghana, with special attention to gender and spatial differences. This overall objective is subdivided into five specific objectives: (1) to assess the effects of trade openness on the gender wage gap and how these effects vary by geographical location of respondents using an augmented standard Mincerian type estimation approach; (2) to examine the gender and spatial differences in the effects of wage on intra-household time allocation to paid and unpaid work in Ghana using a two-step Instrumental Variable Tobit (IV Tobit) estimation technique; (3) to analyse the joint determination of spousal wages and hours of work among monogamous couples in Ghana using the same two-step IV Tobit approach; (4) to determine the effects of income/consumption poverty on gender disparities in intra-household time allocation to paid and unpaid work in Ghana using the Tobit regression; and (5) to estimate the extent of the relationship between time poverty and income/consumption poverty in Ghana using the Recursive Bivariate probit estimation technique. Data for the analysis come from three main sources. Export and import data for goods were extracted from the United Nations (UN) International Trade Statistics Database. The export and import data for services were obtained from the International Trade Centre (ITC), the UN Conference on Trade and Development (UNCTAD) and the WTO Trade in Service Database. The data on Gross Domestic Product (GDP) and the household level data for the last three rounds of the Ghana Living Standard Survey (GLSS) (GLSS4, GLSS5 and GLSS6) were obtained from the Ghana Statistical Service. The key findings from the analysis are the following: (1) The effects of trade openness on wages and gender wage gap vary by the type of wage and trade openness indicators. Irrespective of the type of indicator used, trade openness significantly narrows the gender wage gap but only among urban residents and not in the rural areas where the gap remains higher. (2) Females and rural residents spend more time on unpaid work than males and urban residents. The extent of reduction in hours of unpaid work due to a unit increase in wage is higher among males than females but virtually the same across geographical locations. The wage effect of labour supply is higher for males and rural residents than females and urban residents. (3) There is an element of a working spouse wage premium (regardless of respondents' ethnic affiliation or education level) and complementarity in employment and household labour decisions between couples. Women often have fewer formal employment opportunities open to them and also shoulder a heavier non-paid work burden. (4) Gender inequality in hours of work is more of an issue among the poor and rural residents than among the non-poor and urban residents. Income poverty has a higher effect on inequality in total hours (discretionary time) while consumption poverty has a higher effect on inequality in unpaid hours of work. This suggests that the effects of income and consumption poverty on inequality in hours of work depend on the type of inequality indicator. (5) Although time poverty has fallen since the 1998/1999 survey period (GLSS4), it remains higher among females than males, and higher among urban residents than rural residents. The estimates show that both income and consumption poverty are negatively associated with time poverty. In other words, the results confirm the trade-off hypothesis that time poverty is a phenomenon among the non-poor, but the effect is higher for income poverty than for consumption poverty. Following these key findings, this study recommends that Ghana's Trade Ministry should collaborate with other allied ministries to design policies that will ensure further integration of the economy into global trade. Such policies should be linked with labour market policies that will improve the welfare of females who are engaged in economic activities such as the non-traditional export sectors which are experiencing higher integration into global trade. Government must pursue infrastructural policies that will make rural residents more involved in the integration of Ghana's economy into global trade. Government policies on wage regulation, employment or labour laws and other labour market reforms should be geared at minimising gender inequality in the labour market to ensure more equitable wage rates. Labour unions should focus on real wage rather than nominal wage in their negotiations with government and other employers on the conditions of service of their members since real wage has higher effects on both household production and labour supply than nominal wage. The Ministry of Employment and Labour Relations should collaborate with other allied bodies such as the Ghana Employers Association and trade unions to design labour market policies that will create flexible work conditions, in particular for women. Policymakers should consider both consumption and income poverty in formulating policies aimed at addressing intra-household gender inequality and women's wellbeing. Such policies should pay particular attention to the entrenched 'feminisation of poverty' and other factors that deepen income poverty among women in Ghana. Overall, this study highlights the importance of devising policies and altering entrenched cultural stereotypes that will help to reduce the inequality gap between men and women. This will provide more women the opportunity to better themselves and play a more productive role in the formal labour market.