This thesis investigates the potential for income and job growth in Africa, in the context of acute factor market imperfections. I focus on two countries { Ghana, and to a lesser extent Tanzania { and use a variety of new household and rm-level survey data to investigate growth patterns.
Beginning in 1983, Ghana underwent an ambitious structural adjustment program. Chapter 2 investigates the impact of these reforms by studying the evolution of the manufacturing rm size distribution in the decades immediately following reform. From 1987 to 2003 average rm size fell from 19 to 9 employees. The pattern of industrial evolution underlying this trend diers fundamentally from that found in developed country data. Entering small businesses are not nascent large rms and generally never transition to larger size classes. Credit constraints appear to explain part but not all of this pattern.
Chapter 3 analyzes an experimental village-banking program conducted from 1993-96 in Western Ghana. To date, the few micronance studies able to disentangle causal impacts from the self-selection of borrowers have found negligible eects. In contrast, I nd large impacts on business income and household food security. However, two important caveats apply: (i) program participation is concentrated in more auent households within the village; and (ii) the impacts appear to be once-off, with no sustained growth effect
Chapter 4 investigates income growth and the return to human capital in a segmented labor market. The paper presents a new data set tracking incomes of both formal wage workers and the informal self-employed in urban Ghana and Tanzania. Various econometric techniques are employed to distinguish the returns to skills, earnings differentials between sectors, and endogenous selection between sectors. Estimates of the return to education and experience that fail to account for sectoral dierences greatly exaggerate the importance of skills, particularly in Tanzania, while failing to control for selectivity overstates segmentation in Ghana