Spousal effects on wages, labour supply and household production in Ghana

Background: The relationship between spousal wages and hours of work, including the phenomenon of a spousal premium or penalty, is well documented in the literature. However, there is limited information on the situation in developing countries where labour market rigidities and cultural norms are factors in the division of labour between husbands and wives. Aim: This article addresses the research gap by analysing spousal wages among couples and the cross-wage effect of spousal time allocation. Setting: Households in Ghana, where sociocultural norms largely influence the role of men and women constituted the context of the study. Methods: The instrumental variable Tobit estimation regression was used to analyse pooled data from three Ghana Living Standard Surveys. Results: The results reveal elements of a working spousal wage premium (due to positive selection rather than specialisation) for both men and women regardless of their ethnic affiliations. The analysis of the effect of wage on spousal hours of work also suggested complementarity in employment and household labour decisions between couples. Conclusion: Men’s and women’s participation in household production significantly improves each other’s labour market participation and labour supply. These results corroborate the evidence of a wage premium in the literature. We recommend that government should promote equitable wage rates in the labour market and prioritise policies such as paternal leave which could encourage men to participate in household production and indirectly promote women’s labour force participation.