Unemployment in Ghana: a cross sectional analysis from demand and supply perspectives

Abstract

Purpose – The purpose of this paper is to analyse the causes of unemployment in Ghana from both labour demand and supply perspectives based on most recent cross sectional data set from one nationally representative household survey and a baseline survey for Millennium Development Support. Design/methodology/approach – A logit regression estimation technique is applied to two different household survey data sets of 2008 and 2013 to capture the effect of labour demand and supply on unemployment. Findings – Using education and age as capability variables to represent supply factors, unemployment is found to increase with education, and declines with age, confirming higher unemployment rate among the youth, than the old. The paper also observes strong influence of demand factors on unemployment based on relatively higher incidence of unemployment fulltime jobseekers relative to part-time jobseekers and seekers of formal or wage-employment and self-employment or SMEs compared with those seeking any job. Other factors such as the individual’s reservation wage, marital status, sex and poverty status as well as their rural-urban location are also found to cause unemployment in Ghana. Practical implications – Unemployment as a result of the inability of individuals to obtain a job of their choice in the midst of strong economic growth in Ghana suggests weak employment content of growth. In contrast, an increasing phenomenon of unemployment with education also reflects a problem of skill mismatch between skills churn out by education and training institutions and skills requirement by firms in the labour market. Originality/value – The originality of the paper and its contribution to existing literature largely emanate from the inclusion of demand factors in a cross sectional analysis of causes of unemployment.