CHAPTER 5
The Determinants of Earnings Growth
In this chapter we explore the determinant of earnings growth in the Tanzanian and Ghanaian Urban Panel Surveys. We use the panel nature of the data to understand how earnings change over time and how these changes vary across sectors and differ between workers who change sector and those who don’t. Box 5.1 sets out our key hypotheses and main findings.
Box 5.1 Key Hypotheses and Main Findings Hypothesis 1: The variables that determine earnings levels are also strong predictors of changes in earnings. Main finding: It is difficult to identify predictors of earnings growth. • The models work poorly in Tanzania and for the Ghanaian self-employed. • The models work better for wage workers in Ghana. Hypothesis 2: The determinants of earnings growth vary by sector. Main finding: The factors governing earnings growth vary substantially across sectors. • In Ghana, education is positively associated with earnings growth for wage workers, but not for the self-employed. • Earnings growth is much faster for apprentices than individuals with comparable characteristics. Hypothesis 3: Switching sectors can lead to substantial changes in earnings. Main finding: Switching jobs is the main source of earnings growth. • Moving from small to large firms leads to higher earnings. • Switching sectors also leads to substantial changes in earnings. • Moving to the public sector results in gains. • Moving to self-employment also tends to increase earnings.
Working toward Better Pay • http://dx.doi.org/10.1596/978-1-4648-0207-2 33