Selection into Employment Sectors in Urban Ghana and Tanzania

The paper analyses labour market participation and selection into specific employment sectors in urban areas of Ghana and Tanzania using urban worker survey data from 2004 to 2006 in pooled sample models. A baseline participation model and multinomial logit model of occupational choice is applied. Results from the baseline models suggest determinants of participation differ across the two countries pointing out the heterogeneity in the two labour markets. Specifically in Tanzania, education is found to increase the probability of employment but the reverse is the case in Ghana as education increases the probability of not-working (unemployment). In terms of selection into specific sectors, the results suggest both labour markets are characteristic of a preference for formal sector employment by the highly educated as all levels of education are found to monotonically increase the probability of public and private (formal) sector employment and decrease the probability of selfemployment informal sector). Among age cohorts, young people face morechallenges in accessing formal sector jobs in both countries compared to older people.