Educational inequality and labour market outcomes in Ghana: A district-level analysis

This paper analyses the effect of educational inequality on labour market outcomes using the two recent rounds of Ghana’s census data collected in 2010 and 2021. The study employs fixed-effects and instrumental variable estimations. Additionally, it makes use of spatial econometric tools to explore the role of spatial dependence in these relationships. The findings show that educational inequality significantly increases the rate of vulnerable employment—by about 22%. No significant effects are observed for unemployment, self-employment and unpaid work. Spatial relationships are important, suggesting that spatial models are needed to fully understand the relationship between inequality in education and how that affects labour outcomes. Specifically, the results indicate that educational inequality in neighbouring districts is associated with an 18–35% reduction in vulnerable employment within a given district. Simiarly, an increase in the average rate of vulnerable employment in neighbouring districts is associated with a 28–55% increase in vulnerable employment within the district. These results have important implications for policymakers regarding the distribution of educational resources to ensure the favourable future labour market outcomes.