Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/223297 
Year of Publication: 
2020
Series/Report no.: 
IFS Working Papers No. W20/21
Publisher: 
Institute for Fiscal Studies (IFS), London
Abstract: 
Youth unemployment in Ghana increases in parental wealth. This occurs because, without unemployment insurance, only workers with sufficiently high parental wealth can afford to remain unemployed, and do so to search for scarce, high-productivity jobs. I estimate a structural model of endogenous education, employment and occupational choice to quantify this effect; I demonstrate that it leads to low educational attainment, high income inequality, and low match efficiency among workers of heterogeneous ability. I decompose the effect of wealth on average lifetime earnings into education and unemployment channels, and show that the latter accounts for 37% of the total effect. Further, I compare the effectiveness of two alternative policy interventions: an education subsidy and unemployment insurance. I find that the former is most effective at increasing aggregate productivity, but comes at the cost of increasing income inequality, while the later has a smaller effect on aggregate productivity, but also decreases inequality.
Subjects: 
Youth Unemployment
Occupational Choice
Human Capital Investment
Credit Constraints
Unemployment Insurance
JEL: 
J24
I24
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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