Moonlighting and Wage Differentials: A Case Study of The Public and Formal Private Sectors In Ghana

Authors' Names

Matilda Kabutey-Ongor, University of Montana, MissoulaFollow

Presentation Type

Oral Presentation

Category

Social Sciences/Humanities

Abstract/Artist Statement

In comparison to private sector workers, workers in the public sector in Ghana are far more likely to supplement their incomes by taking on additional jobs, which is also known as moonlighting. Previous research on the moonlighting phenomenon in Ghana has focused on general motives for taking on a second job, but the workers’ decision to moonlight may differ across sectors. With an increasing wage gap between private and public sector wages in Ghana, the differentials in these sectors could have a significant impact on the individual’s decision to moonlight.

This paper examines the incidence and motivations for moonlighting with a focus on the public and private sectors in Ghana. The paper analyzes the factors that determine wages offered in each sector and examines the impact of the wage gap on workers’ decisions to moonlight. The study uses data from the most recent Ghana Living Standard Survey (GLLS7) to implement three regression techniques: Ordinary Least Squares (OLS) regression techniques to identify wage-determining factors in the private and public sector, Oaxaca Blinder decomposition to measure wage differentials in the sectors, and the Probit regression estimation to analyze moonlighting factors in each sector.

The results of this study show that several factors play an important role in determining wage differentials in each sector. These include personal characteristics (gender, location of the individual, and educational attainment level of the individual), and labor market characteristics (job experience). The higher incidence of moonlighting in the public sector is linked to lower wages in the public sector. This study will aid policymakers who seek to understand the factors and implications of the wage gap between the public and private sectors and will help them to choose policies that will reduce wage disparity.

Mentor Name

Amanda Dawsey

Personal Statement

My country has always valued doctors, lawyers, and accountants. Many Ghanaian kids grasp this early on and shape their professions accordingly. My childhood dream was to become a doctor, too. As a young adult, I quickly realized that I could select a subject of study that I was interested in, and this led me to choose Economics by the time I had to enroll in college. I realized that economics is a part of every choice we make and that a thorough understanding of the subject paves the way for meaningful social engagement. I subsequently came to the decision that I wanted to pursue a career in academics and work with other economic groups. This influenced my decision to further my studies to get my first master’s degree in Economics at the University of Ghana where I wrote my thesis on the topic; Moonlighting and Wage Differential: A Case Study of the Formal Private and Public Sector in Ghana, for which I am submitting for the University of Montana Graduate Student Research Conference (GradCon). The term Moonlighting is simply the act of engaging in multiple jobs during a period. An example is someone who works as an auditor and owns or works as a carpenter. Based on past and current literature, the general understanding of the term moonlighting is a person taking a second job that is separate from his or her main source of income. For moonlighting to occur, the individual must be directly involved in both jobs. The two main reason for moonlighting has been due to financial constraint and/or hourly constraint. The financial constraint motive is a person's desire to earn more than their primary employment pays, whereas the hourly constraint motive is a desire to work more hours. Moonlighting has been more prevalent in Ghana over time, and the income and salary disparity between the formal public and private sectors has continued to widen. The purpose of this study was to examine the motivations behind employees' multiple job holding in the formal public and private sectors of Ghana and to determine whether the disparity in pay between the two sectors is a factor in their decision to moonlight. The main characteristics of the Ghanaian labor market that lead to people moonlighting are underemployment (a situation in which people are required to work in low-paying or low-skill jobs), vulnerable employment (typically characterized by poor wages, low productivity, and difficult working conditions that violate employees' fundamental rights), and informality (market-valued but not officially recognized activities). Therefore, by providing better services to their employees, employers can strengthen employer-employee relationships and reduce the incidence of moonlighting. This study assists policymakers, employers, and stakeholders, among others, in making better policies to bridge the wage gap between the two sectors. My study should be the 'Best of Gradcon' because of how diversified my research topic is and how it can be applied to the labor market in the United States of America. A strong labor market implies high productivity, which translates into higher revenue.