Abstract
This paper examined the causal effect of access to electricity on labor outcomes such as employment, wages, as well as employment shift in the agriculture and service sectors in Ghana. As an alternative measure of electricity access, this paper exploits the complementarities between access to electricity, water, and public transport by constructing an infrastructural index using principal component analysis. Using the three latest waves of the Ghana Living Standard Survey (round 5, 6, and 7), the slope of land was used as an instrument for electricity and the infrastructural index. The results of the instrumental variable estimation showed an increase in wages whilst inducing shifts in employment from the agriculture to the service sector because of access to electricity and improvement in the infrastructural index. The shift in employment is statistically significant for females only. Additional welfare analysis showed that access to electricity and improvement in the overall infrastructural index leads to significant increase in the demand for some durable goods whiles reducing the demand for others. Several policy measures in improving the labor market and investment in durable goods arising from availability of public infrastructures in the country were provided.
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