The disincentives to accepting a formal job often outweigh the incentives. Our research shows a positive correlation between measures of disincentives for formal work and the incidence of being informal. The formalization tax rate and the marginal effective tax rate are useful measures. The higher these measures are, the more likely workers - especially low-wage workers - will be informal. Policymakers need measures that help them understand the disincentives associated with formal work if they are to design policies that encourage formalization.
Indian policymakers are concerned with the employability of their working-age populations. Technical and vocational education and training (TVET) might enhance the employability prospects of the present and near-term labor force. However, if we wish to become a knowledge economy, with highly skilled and dynamic rather than an abundant, cheap labor force, we should revamp our inefficient and inequitable early health and education systems.
Ghana’s economy has grown consistently over the past three decades, however, inadequate job creation, the depth of poverty, and widening income inequality, remain major challenges. The inability of Ghana’s growth to deal with these challenges is an indication of the urgent need to rethink of Ghana’s growth strategy.