In Ghana's manufacturing sector, workers tend to be employed by members of their own ethnic group, and different ethnic groups run very different types of enterprises. Employers favor their relatives in pay and in job allocation, possibly because they are more productive. There is no evidence of...

The authors look at earnings differentials between members of different ethnic groups, and between employers' relatives, unrelated members of the same ethnic group, and other workers in Ghana's manufacturing sector. They find that a significant proportion of the earnings differentials identified...