Apprenticeship Contracts, Small Enterprises, and Credit Markets in Ghana

Abstract

The economics literature includes no systematic portrait of either the prevalence and scope of apprenticeship in manufacturing or the microeconomic details of the contracts involved. This paper begins the process of filling in both those gaps by providing a quantitative assessment of the importance of apprenticeship in Ghanaian manufacturing and presenting an analysis of the contractual relationships between apprentices and employers that characterize this institution. Understanding the structure of apprenticeship contracts is a first step toward an analysis of the usefulness of the institution in skill formation, productivity increase and growth in the manufacturing sector. This paper takes that first step by creating a descriptive portrait and beginning an institutional analysis using the results of a 1992 survey of 185 manufacturing firms in Ghana. The paper presents three major findings: 1) the training of apprentices is both a widespread current activity and part of the training of a large fraction of entrepreneurs and manufacturing workers; 2) there are two primary types of contracts, those in which apprentices pay fees for their training, and those in which they do not; and 3) for those firms training apprentices, the choice of contract appears to be strongly correlated with other characteristics of the firm, particularly its use of credit. Finally, the paper is divided into the four following sections: 1) description of the data and the study from which it is drawn; 2) broad quantitative discussion of the incidence of apprenticeship; 3) description of the two primary types of contracts, their importance, and some characteristics of the individuals and firms who participate in them; and 4) summary and questions for future research in the area.