The structure and determinants of
            inequality and poverty reduction in Ghana, 1988-92
Using three rounds of the Ghana Living
            Standard Survey, conducted between 1988 and 1992, the
            authors present findings that shed light on the structure of
            inequality among different socioeconomic groups in different
            geographic areas, in the context of poverty reduction.
            First, poverty reduction can be attributed mainly to
            improvements in both average levels of income and the
            pattern of its distribution in the informal and nonfarm
            sectors in other cities and rural areas outside the capital
            city, Accra. Second, an analysis of different measures of
            inequality reveals that the most important changes in the
            degree of inequality took place at the lower end of the
            distribution. But the direction of change was different in
            Accra compared with the localities outside Accra. In Accra,
            while inequality increased overall, the inequality in the
            lower part of the distribution increased much more. In other
            cities, there was a more or less uniform improvement all
            along the distribution. But in the rural areas, there was a
            significant improvement at the lower end, but a
            deterioration at the upper end. Third, structural adjustment
            - which aimed to cut back public sector employment and
            stimulate activities in the private sector - raised living
            standards in rural areas and other cities, but not in Accra.
            The public sector is much larger in Accra than in other
            cities and rural areas. Contraction of the public sector in
            other cities and rural areas was compensated for by income
            growth in the informal and nonfarm sectors. But contraction
            of Accra's large public sector dominated the local
            economy, so living standards declined in both formal and
            informal sectors. Accra's economy will probably grow as
            its private and informal sectors grow. Fourth, major shifts
            in the population occurred in all localities from the formal
            to the informal sector, but the magnitude of the shift was
            largest in Accra - in fact, several times more than in the
            other localities. The deterioration of the income at the
            lower part of the distribution in both the formal and the
            informal sectors is mainly responsible for the decline in
            the welfare of the low income households in Accra. These
            findings suggest that an integrated regional strategy,
            taking into account the local socioeconomic structure, is
            necessary for achieving economic growth and poverty
            reduction in all regions. Another important finding: The
            poor do not benefit as much from education as the nonpoor do
            because there is very low return (in income) to primary
            education, the highest level most poor Ghanaians can hope
            for. Education helps increase, rather than decrease,
            inequality, so primary education for the poor should be
            designed to provide them with income-earning skills.
            Developing economic strategies for sustainable poverty
            reduction will require further research on activities in the
            informal sector. Another issue that requires investigation
            is the role of different administrative regions in the
            determination of household welfare that seems to have
            changed over the period under study. Findings from such an
            analysis will facilitate the design of appropriate regional
            strategies for poverty reduction in Ghana.