The evidence from Ghana itself paints a picture of dampened private sector job growth, despite nearly twenty years of sustained economic expansion. Evidence from the early 1990s showed signs that job growth was possibly driven from the middle, by medium-sized firms, with signs of low-value-added firms converging with higher-value-added counterparts (Teal 1999). However, more recent evidence has shown a mismatch between GDP and employment growth — with jobs not keeping up with economic expansion — in part due to a lower labor intensity among fast growing sectors and labor absorption by slow-growing ones such as manufacturing and agriculture (Aryeetey and Baah-Boateng 2015). That is, the sectors that are growing are not relying on expanding their employment to grow. One study notes that while real GDP growth averaged nearly 6 percent between 2000 and 2010, employment growth averaged only 3 percent, an indication of so-called “jobless growth” (Alagidede et al 2013).

Davies and Kerr (2015) link these patterns to firm dynamics. They find that between 2003 and 2013, there was a broad, net contraction of labor in all subsectors and across size categories. Over this last period, the overall exit rate of manufacturing firms<sup>5</sup> was about 21 percent (another 22 percent could not be traced). In their study, small and young firms are more likely to exit the market, echoing earlier findings from Frazer (2005), and higher exit rates were found in the food and textile and garments industries. In fact, though productivity has been found to mitigate the risk of exit — an indication that competitive markets may induce more productive firms to replace less competitive incumbents — small firms remain particularly at risk of exiting the market, even at similar productivity levels (Soderbom et al 2006). Relatedely, there was little _within-firm_ growth among a panel of manufacturing firms in Ghana between 1987 and 2003 (Sandefur 2010).<sup>6</sup> Yet while these studies draw from extensive evidence, Ghana’s recent boon — with the 2010 discovery of oil reserves — may welcome in substantial job growth.

# **III. Data and Descriptive Statistics**

The firm-level data used in this paper are taken from the World Bank’s Enterprise Surveys (ES) project. These data were collected in Ghana in 2013–14 and refer to fiscal year periods between 2010 and 2012, though they are cross-sectional and utilize recall information as well as financial and employment records.<sup>7</sup> As cross-sectional data, however, the ES do not capture firm entry and, particularly, firm exit and thus there is the potential for an incumbency bias by only gathering information from surviving firms.

> 5 They sampled about 1,000 manufacturing firms from the Ghana National Industrial Census (2003) and surveyed them in 2013; new entrants in 2013 are not captured—only those firms operating in 2003. Results reported here refer to the exit measured as those firms that closed and that could not be found/tracked in 2013.

> 6 Using a panel data on manufacturing firms between 1987 and 2003 in Ghana, Sandefur (2010) showed that there was actually little evidence for within-firm growth: firms that were small in 1988 remained small in 2003, and the big firms operating in 2003 were already big in 1988.

> 7 The data necessarily rely on recall questions for sales revenues and employment, introducing an element of recall bias. When possible records are taken from books and employment records directly. Of 1,940 firms interviewed, 29 percent were taken fully or partially from books, while 63 percent were based on estimates computed with some precision. Eight percent were regarded as arbitrary and unreliable; all assessments are based on enumerator notes and opinion.

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