Yet, despite this upward trajectory in economic growth, Ghana’s private sector employment remains largely informal. According to the World Bank Ghana Enterprise Surveys the size of the formal private sector remains small: registered firms account for a tiny share of total employment in Ghana, an estimate near 2 percent (estimates based on the GLSS6, World Bank 2016). To these, add concerns that highly concentrated production in commodity-based industries leave the Ghanaian economy at risk of adverse shocks and requiring further diversification.

Together these trends beg the question: has this growth been jobless? The link between economic growth and job creation depends on the extent to which growth generates employment, while the povertyreducing effects of employment generation depend on the type of jobs that respond to growth: notably this depends on the extent to which poor workers benefit from new jobs. Indeed, since 2005 job creation has more than kept up with the growth of the working-age population **.** Annual job creation reached 4.0 percent between 2005 and 2012, while the annual growth in the working-age population was about 2.6 percent, based on the Ghana Living Standard Survey (rounds 5 and 6). However, relative to its economic growth, the Ghanaian economy has created relatively few jobs. During the same period, average economic growth increased 8 percent per year (much more than before 2005), meaning that every 1 percent increase in economic growth was associated with 0.5 percent increase in job growth. The employment-growth elasticity (the percentage change in employment given a 1 percentage point change in growth) dropped to 0.5 from an average of 0.7 in the 15 preceding years.<sup>1</sup> This suggests a marginal slowdown in job creation in response to economic growth that was driven by sectors that generate low employment: mining and commercial oil production.

Most job creation in recent years has taken place in economic sectors with relatively low labor productivity, and in urban self-employment, rather than wage employment (World Bank 2016). In fact the main source of job creation has been the trade services (wholesale and retail) sectors.<sup>2</sup> In total, Ghana’s economy created nearly 3 million jobs between 2005 and 2012, of which most were in urban areas and with nearly half in the trade sector. The agriculture sector, while shrinking in relative terms, continued to create a significant number of jobs in absolute terms. By contrast, with the exception of construction, the industry sector has created very few jobs. Put differently, the bulk of job expansion has occurred in precisely the two economic sectors with the lowest levels of labor productivity — as measured by value added per worker (World Bank 2016).

The dynamics of firms in Ghana’s private sector — which types are the main employers and which are the characteristics of the fastest growing firms — add evidence to the heterogeneous aspects underlying recent job growth and to whether job growth is narrowly concentrated or more widespread. If firms employ workers and add jobs commiserate with their sales (in terms of volume and growth), then this recent growth

> 1 Based on authors’ calculations, using data from the World Development Indicators.

> 2 Notably employment also increased in other services activities such as financial and business services and public administration.

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