Employing the Ultra-Poor in Ghana: Investigating Rural Labor Markets

Abstract

There is increasing evidence that labor market imperfections are critical impediments to development in rural areas, particularly in Sub-Saharan Africa. In rural Ghana, agriculture is the main economic activity for the vast majority of households. Most practice subsistence farming, employing family labor and growing food for consumption, and few people participate in wage labor as an important income-generating activity. However, when family labor is valued at market prices to calculate profits, farm profits are generally negative. Why don’t more people engage in paid labor, and what consequences does this have for household welfare? This project explores two categories of questions that aim to understand the underpinnings of rural labor markets imperfections. First, if people did have access to paid labor, what factors would affect their decisions to participate or not? Second, why are labor markets in Sub-Saharan Africa so thin, and what roles might anti-poverty programs play in improving them?