Living standards in Ghana, 1955–2005
I. Martins
Labour and Work in Ghana Since Independence · Edited by Gareth Austin, Akua Britwum, Lamine Doumbia, Andreas Eckert, and Nana Yaw Sapong. London: Bloomsbury Academic
Using consumption baskets matched to the diets of Ghana’s three ecological zones, I show that national baskets understate living standards in the northern savannah, and that the widening gap between regions in 1988–2005 came mainly from rural areas.
This paper constructs regional welfare ratios for Ghana from 1955 to 2005, combining five rounds of the Ghana Living Standards Survey with archival wage and price data. Using Allen-type consumption baskets calibrated to the dietary patterns of Ghana’s three ecological zones, I show that national baskets systematically misrepresent regional living standards in countries with significant dietary heterogeneity. Under a national basket priced at regional levels, several northern regions appear unable to meet subsistence. When the basket composition is allowed to reflect zone-specific diets, welfare ratios improve substantially in the savannah regions, where local staples (millet, sorghum) are cheaper than the cassava and plantain that dominate the national basket. I further decompose regional welfare by urban and rural status, showing that both urban and rural areas are diverging across regions, but that rural divergence is far more severe. The aggregate widening of regional inequality in Ghana over 1988–2005 is driven primarily by the rural sector.