On Promoting Entrepreneurship and Job Creation in Africa: Evidence from Ghana and Kenya

We use a large and rich dataset containing retrospective information on entrepreneurs at startups in urban Ghana and Kenya to show that employers have distinct characteristics and skills when compared to own-account workers. Specifically, we find that noncognitive skills are highly associated with the likelihood of becoming an entrepreneur among individuals with higher cognitive skills. In establishing these characteristics, we present new evidence on the determinants and the consequences of entrepreneurship in Ghana and Kenya. We document that large earning differentials between employers and own-account workers are due to the difference in their observable characteristics.