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On Kin Groups and Wages in the Ghanaian Labour Market

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  • Paul Collier
  • Ashish Garg

Abstract

A common feature of African societies is that individuals belong to kin groups which impose reciprocal obligations upon their members. In the modern economy, where large scale production is required, forms must employ multiple kin groups. In such cases kin groups will try to favour their own members in the assignment of good jobs. We analyze the effects of kin group patronage in the modern sector. We set out a model in which kin group favouritism is shown to give rise to a wage premium for the largest kin group. We then use an unusually rich data set from Ghana to test for kin group favouritism, empirically distinguishing it from ‘taste for discrimination’. We find that in the private sector there is no evidence for kin group patronage and earning functions (corrected for selection into the various sectors) reveal that workers are paid according to their human capital attributes. By contrast, public sector workers are rewarded for their credentials and membership of the right kin group, not for their productive characteristics. The kin group premium is about 25 percent and is statistically robust to alternative specifications.

Suggested Citation

  • Paul Collier & Ashish Garg, 1999. "On Kin Groups and Wages in the Ghanaian Labour Market," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(2), pages 133-151, May.
    • Handle: RePEc:bla:obuest:v:61:y:1999:i:2:p:133-151
    DOI: 10.1111/1468-0084.00122
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    Cited by:

    1. Aggarwal, Shilpa & Francis, Eilin & Robinson, Jonathan, 2018. "Grain today, gain tomorrow: Evidence from a storage experiment with savings clubs in Kenya," Journal of Development Economics, Elsevier, vol. 134(C), pages 1-15.
    2. Antoninis, Manos, 2006. "The wage effects from the use of personal contacts as hiring channels," Journal of Economic Behavior & Organization, Elsevier, vol. 59(1), pages 133-146, January.
    3. Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, vol. 34(1), pages 1-15, January.
    4. Michele Mosca & Francesco Pastore, 2009. "Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector," AIEL Series in Labour Economics, in: Marco Musella & Sergio Destefanis (ed.), Paid and Unpaid Labour in the Social Economy, chapter 0, pages 115-141, Springer.
    5. Eliana La Ferrara, 2003. "Kin Groups and Reciprocity: A Model of Credit Transactions in Ghana," American Economic Review, American Economic Association, vol. 93(5), pages 1730-1751, December.
    6. Gerring, John & Thacker, Strom C. & Lu, Yuan & Huang, Wei, 2015. "Does Diversity Impair Human Development? A Multi-Level Test of the Diversity Debit Hypothesis," World Development, Elsevier, vol. 66(C), pages 166-188.
    7. Mano, Yukichi & Yamano, Takashi & Suzuki, Aya & Matsumoto, Tomoya, 2011. "Local and Personal Networks in Employment and the Development of Labor Markets: Evidence from the Cut Flower Industry in Ethiopia," World Development, Elsevier, vol. 39(10), pages 1760-1770.
    8. Barrett, Christopher B. & Swallow, Brent M., 2006. "Fractal poverty traps," World Development, Elsevier, vol. 34(1), pages 1-15, January.
    9. Akcomak, Semih, 2009. "Bridges in social capital: A review of the definitions and the social capital of social capital researchers," MERIT Working Papers 2009-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Mwangi Gĩthĩnji, 2015. "Erasing Class/(Re)Creating Ethnicity: Jobs, Politics, Accumulation and Identity in Kenya," The Review of Black Political Economy, Springer;National Economic Association, vol. 42(1), pages 87-110, June.
    11. Platteau, Jean-Philippe, 2009. "Institutional obstacles to African economic development: State, ethnicity, and custom," Journal of Economic Behavior & Organization, Elsevier, vol. 71(3), pages 669-689, September.
    12. Nordvik, Frode Martin, 2022. "Inflation news and the poor: The role of ethnic heterogeneity," World Development, Elsevier, vol. 151(C).
    13. Akcomak, Semih & Ter Weel, Bas, 2007. "How do social capital and government support affect innovation and growth? Evidence from the EU regional support programmes," MERIT Working Papers 2007-009, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Gerard Padro i Miquel, 2006. "The Control of Politicians in Divided Societies: The Politics of Fear," NBER Working Papers 12573, National Bureau of Economic Research, Inc.
    15. Jean-Philippe Platteau, 2009. "Institutional Obstacles to African Economic Development: State, Ethnicity, and Custom," Post-Print hal-00726664, HAL.

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