IDEAS home Printed from https://ideas.repec.org/p/not/notcre/07-02.html
   My bibliography  Save this paper

Who Gains from Trade Protection in Ghana? A Household-Level Analysis

Author

Listed:
  • Charles Ackah,
  • Oliver Morrissey,
  • Simon Appleton

Abstract

In this paper, we present one of the first direct microeconometric studies of the impact of trade protection on household income in Ghana. Tariff measures at the two-digit ISIC level are matched to Ghanaian household survey data for 1991/92 and 1998/99 to represent the tariff for the industry in which the household head is employed. We examine the possibility that the effect of protection on income might not be uniform across households characterized by different skill levels. Specifically, we allow the relationship between welfare and trade policy to differ for households with different levels of education. In the absence of suitable panel data, the analysis applies pseudo-panel econometric techniques to our repeated cross-section data. This method has rarely been used in poverty analysis. The results suggest that higher tariffs are associated with higher incomes for households employed in the sector, so tariff reductions may reduce incomes (and increase poverty), at least in the short run, but with differing effects across skill groups. We find that this positive effect of protection is disproportionately greater for low skilled labour households, suggesting an erosion of welfare of unskilled labour households would result from trade liberalization. We conclude that contemplating trade liberalization without recognizing the complementary role of human capital investment may be a sub-optimal policy for the poor, at least in the short-run.

Suggested Citation

  • Charles Ackah, & Oliver Morrissey, & Simon Appleton, 2007. "Who Gains from Trade Protection in Ghana? A Household-Level Analysis," Discussion Papers 07/02, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:07/02
    as

    Download full text from publisher

    File URL: https://www.nottingham.ac.uk/credit/documents/papers/07-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1.
    2. Anne O. Krueger, 1983. "Trade and Employment in Developing Countries, Volume 3: Synthesis and Conclusions," NBER Books, National Bureau of Economic Research, Inc, number krue83-1.
    3. Verbeek, Marno & Vella, Francis, 2005. "Estimating dynamic models from repeated cross-sections," Journal of Econometrics, Elsevier, vol. 127(1), pages 83-102, July.
    4. Richard Blundell & Martin Browning & Costas Meghir, 1994. "Consumer Demand and the Life-Cycle Allocation of Household Expenditures," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(1), pages 57-80.
    5. Görg, Holger & Strobl, Eric, 2002. "Relative Wages, Openness and Skill-Biased Technological Change," IZA Discussion Papers 596, Institute of Labor Economics (IZA).
    6. L. ALAN WINTERS & NEIL McCULLOCH & ANDREW McKAY, 2015. "Trade Liberalization and Poverty: The Evidence So Far," World Scientific Book Chapters, in: Non-Tariff Barriers, Regionalism and Poverty Essays in Applied International Trade Analysis, chapter 14, pages 271-314, World Scientific Publishing Co. Pte. Ltd..
    7. Francis Teal, 2001. "Education, incomes, poverty and inequality in Ghana in the 1990s," CSAE Working Paper Series 2001-21, Centre for the Study of African Economies, University of Oxford.
    8. Verbeek, Marno & Nijman, Theo, 1992. "Can Cohort Data Be Treated as Genuine Panel Data?," Empirical Economics, Springer, vol. 17(1), pages 9-23.
    9. Attanasio, Orazio P & Weber, Guglielmo, 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1121-1157, December.
    10. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    11. Francis Teal & Marcella Vigneri, 2004. "Production changes in ghana cocoa farming households under market reforms," CSAE Working Paper Series 2004-16, Centre for the Study of African Economies, University of Oxford.
    12. Francis Teal, 2001. "Education, incomes, poverty and inequality in Ghana in the 1990s," Economics Series Working Papers WPS/2001-21, University of Oxford, Department of Economics.
    13. Verbeek, Marno & Nijman, Theo, 1993. "Minimum MSE estimation of a regression model with fixed effects from a series of cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 125-136, September.
    14. Harrison, Ann & Hanson, Gordon, 1999. "Who gains from trade reform? Some remaining puzzles," Journal of Development Economics, Elsevier, vol. 59(1), pages 125-154, June.
    15. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336, National Bureau of Economic Research, Inc.
    16. Goldberg, Pinelopi Koujianou & Pavcnik, Nina, 2005. "Trade, wages, and the political economy of trade protection: evidence from the Colombian trade reforms," Journal of International Economics, Elsevier, vol. 66(1), pages 75-105, May.
    17. Simon Appleton, 1995. ""The rich are just like us, only richer." Poverty functions or consumption functions? Evidence from Uganda," CSAE Working Paper Series 1995-04, Centre for the Study of African Economies, University of Oxford.
    18. Girma, Sourafel, 2000. "A quasi-differencing approach to dynamic modelling from a time series of independent cross-sections," Journal of Econometrics, Elsevier, vol. 98(2), pages 365-383, October.
    19. Francis Teal & Marcella Vigneri, 2004. "Production changes in ghana cocoa farming households under market reforms," Economics Series Working Papers WPS/2004-16, University of Oxford, Department of Economics.
    20. Jeffrey C. Fuhrer, 2000. "Habit Formation in Consumption and Its Implications for Monetary-Policy Models," American Economic Review, American Economic Association, vol. 90(3), pages 367-390, June.
    21. Verbeek, M.J.C.M. & Nijman, T.E., 1992. "Can cohort data be treated as genuine panel data?," Other publications TiSEM d4eada8f-b91c-4fe7-a58c-7, Tilburg University, School of Economics and Management.
    22. Blundell, Richard & Meghir, Costas & Neves, Pedro, 1993. "Labour supply and intertemporal substitution," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 137-160, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Vincent Leyaro & Oliver Morrissey, 2010. "Protection and the Determinants of Household Income in Tanzania 1991 – 2007," Discussion Papers 10/03, University of Nottingham, CREDIT.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rumman Khan, 2018. "Assessing cohort aggregation to minimise bias in pseudo-panels," Discussion Papers 2018-01, University of Nottingham, CREDIT.
    2. David Aristei & Luca Pieroni, 2010. "Habits, Complementarities and Heterogeneity in Alcohol and Tobacco Demand: A Multivariate Dynamic Model," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(4), pages 428-457, August.
    3. Verbeek, Marno & Vella, Francis, 2005. "Estimating dynamic models from repeated cross-sections," Journal of Econometrics, Elsevier, vol. 127(1), pages 83-102, July.
    4. Vincent Leyaro & Oliver Morrissey, 2010. "Protection and the Determinants of Household Income in Tanzania 1991 – 2007," Discussion Papers 10/03, University of Nottingham, CREDIT.
    5. Hong Liu & Wei Tan, 2009. "The Effect of Anti-Smoking Media Campaign on Smoking Behavior: The California Experience," Annals of Economics and Finance, Society for AEF, vol. 10(1), pages 29-47, May.
    6. Lavin, Felipe Vasquez & Bratti, Luna & Orrego, Sergio & Barrientos, Manuel, 2020. "Assessing the Use of Pseudo-panels to Estimate the Value of Statistical Life in Developing Countries," EfD Discussion Paper 20-20, Environment for Development, University of Gothenburg.
    7. McKenzie, David, 2001. "Consumption Growth in a Booming Economy: Taiwan 1976-96," Center Discussion Papers 28398, Yale University, Economic Growth Center.
    8. Tamvada, Jagannadha Pawan, 2010. "The Dynamics of Self-employment in a Developing Country: Evidence from India," MPRA Paper 20042, University Library of Munich, Germany.
    9. Hai‐Anh H. Dang & Peter F. Lanjouw, 2023. "Measuring Poverty Dynamics with Synthetic Panels Based on Repeated Cross Sections," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(3), pages 599-622, June.
    10. Inoue, Atsushi, 2008. "Efficient estimation and inference in linear pseudo-panel data models," Journal of Econometrics, Elsevier, vol. 142(1), pages 449-466, January.
    11. Antonio Cutanda & José M. Labeaga & Juan A. Sanchis-Llopis, 2020. "Aggregation biases in empirical Euler consumption equations: evidence from Spanish data," Empirical Economics, Springer, vol. 58(3), pages 957-977, March.
    12. Dolores Collado, M., 1997. "Estimating dynamic models from time series of independent cross-sections," Journal of Econometrics, Elsevier, vol. 82(1), pages 37-62.
    13. Rumman Khan, 2021. "Assessing Sampling Error in Pseudo‐Panel Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(3), pages 742-769, June.
    14. Guarini, Giulio & Laureti, Tiziana & Garofalo, Giuseppe, 2018. "Territorial and individual educational inequality: A Capability Approach analysis for Italy," Economic Modelling, Elsevier, vol. 71(C), pages 247-262.
    15. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1.
    16. Inkmann, Joachim & Klotz, Stefan & Pohlmeier, Winfried, 1998. "Growing into Work - Pseudo Panel Data Evidence on Labor Market Entrance in Germany," ZEW Discussion Papers 98-47, ZEW - Leibniz Centre for European Economic Research.
    17. Badi Baltagi & Seuck Song, 2006. "Unbalanced panel data: A survey," Statistical Papers, Springer, vol. 47(4), pages 493-523, October.
    18. Rosati, Nicoletta, 2013. "Efficiency of repeated-cross-section estimators in fixed-effects models," Statistics & Probability Letters, Elsevier, vol. 83(7), pages 1770-1775.
    19. Jagannadha Pawan Tamvada & Mili Shrivastava & Tapas Kumar Mishra, 2022. "Education, social identity and self-employment over time: evidence from a developing country," Small Business Economics, Springer, vol. 59(4), pages 1449-1468, December.
    20. Bernard, Jean-Thomas & Bolduc, Denis & Yameogo, Nadège-Désirée, 2011. "A pseudo-panel data model of household electricity demand," Resource and Energy Economics, Elsevier, vol. 33(1), pages 315-325, January.

    More about this item

    Keywords

    Tariffs; Trade liberalisation; Household welfare; Pseudo-panel; Ghana;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:not:notcre:07/02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hilary Hughes (email available below). General contact details of provider: https://edirc.repec.org/data/cenotuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.