Who Gained from Trade Liberalisation in Ghana? Unskilled vs. Skilled Households

In this paper, we present one of the first direct microeconometric evidence of the impact of trade protection on household poverty in Ghana. The study examines the impact of Ghana’s trade policy reforms in the 1990s on poverty. We match trade policy measures at the two-digit ISIC level to household survey data for 1991/92 and 1998/99. We emphasize the possibility that the effect of protection on poverty might not be uniform across households characterized by different skill levels. Our analyses indicate that a decrease in an industry tariff tends to be associated with lower welfare being earned by households employed in the industry, controlling for household characteristics, geographic variables and industry fixed-effects. We find that this negative effect of trade liberalization is disproportionately greater for low skilled labour households. The results suggest an erosion of welfare of unskilled labour households from trade liberalization. 1 I am grateful to my supervisors, Professor Oliver Morrissey and Dr Simon Appleton for their valuable guidance and comments. Contact email: [email protected].