Investing in Future Generations: Global Cocoa Price shocks and their impact upon School Attendance and Child Employment Rates in Ghana, 1987-1991

Abstract: This paper looks into the responses of cocoa farming households to a negative shock in the global cocoa price with regards to how they invest into the future of their children. The specific child outcomes of focus are child employment rates, school attendance, and household expenditure on schooling and related activities. A differences-in-differences approach is used in line with previous literature studying the effects of macroeconomic shocks upon households in developing countries. Using two Ghana Living Standard Surveys, an analysis is done between the years 1987 and 1991 that finds children of cocoa farmers had a lower child employment rate, higher school attendance, and slightly more spending on female education after the global cocoa price shock. These findings are found to be generally robust, although attention needs to be paid to school attendance which was under the effect of recent educational reform that can have affected the results. Comparisons are made to Côte d’Ivoire in the same time period which show that the two neighbouring countries were on fundamentally different economic and political cycles during this period and some reasons behind this are explored.