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Informal work in sub-Saharan Africa: Dead end or stepping-stone? Cover

Informal work in sub-Saharan Africa: Dead end or stepping-stone?

Open Access
|Nov 2021

Figures & Tables

Figure 1

Work status classification.

Source: Authors’ own construct.

Table 1

Distribution of workers by work status (%)

GhanaSouth AfricaTanzaniaUganda
a) Proportion of employment by work status
Wage employedFormal13.256.711.711.7
InformalUpper5.38.93.310.8
Lower18.921.428.626.0
Self-employedFormal8.94.09.13.1
InformalUpper11.95.43.95.8
Lower41.83.743.442.6
TOTAL100100100100
b) Proportion of formal vs. informal employment
Formal22.160.620.714.9
InformalUpper17.214.37.216.6
Lower60.725.172.068.6
TOTAL100100100100
c) Proportion of upper-tier informality in informal employment
Upper informal in total informal employment22.136.49.119.4
Upper informal in informal self-employment22.259.78.211.9
Upper informal in informal wage employment22.029.410.529.4

[i] Note: For each country, summary statistics are compiled for the initial wave of panel study under study. Workers employed on family farms have been excluded from the analysis.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10, NIDS 2014/15, TZNPS 2010/11, and UNPS 2010/11.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table 2

Transition matrices across work status groups

WAVE t = 1Share of stayers
Wage employedSelf-employed
FormalInformalFormalInformal
UpperLowerUpperLower
a) Ghana
WAVE t = 0Wage employedFormal65.16.99.64.33.610.68.6
InformalUpper33.011.823.72.53.225.80.6
Lower21.75.332.27.56.426.96.1
Self-employedFormal2.13.412.129.515.837.12.6
InformalUpper4.02.515.214.744.718.95.3
Lower2.12.015.86.86.367.228.1
TOTAL21.04.518.49.111.235.851.3
b) South Africa
WAVE t = 0Wage employedFormal83.37.15.82.21.10.547.2
InformalUpper50.125.114.76.01.03.12.2
Lower26.413.147.74.73.94.310.2
Self-employedFormal13.09.75.150.813.38.12.0
InformalUpper12.211.119.516.123.517.61.3
Lower14.76.216.86.924.630.81.1
TOTAL63.49.914.95.23.43.164.0
c) Tanzania
WAVE t = 0Wage employedFormal79.74.49.71.51.03.69.3
InformalUpper45.85.833.16.52.96.00.2
Lower14.80.962.42.93.515.517.9
Self-employedFormal2.00.05.031.718.243.12.9
InformalUpper4.50.021.815.223.135.40.9
Lower5.81.515.38.34.164.928.2
TOTAL22.21.827.38.66.034.259.3
d) Uganda
WAVE t = 0Wage employedFormal58.027.08.15.20.01.76.8
InformalUpper20.048.314.15.76.15.95.2
Lower4.76.268.32.74.313.917.7
Self-employedFormal2.70.010.520.715.051.10.6
InformalUpper0.04.65.013.939.836.82.3
Lower2.21.011.94.47.273.231.2
TOTAL14.813.324.35.77.934.163.9

[i] Note: Each row indicates work status in the base period, and each column in transition matrices indicates work status in the next period; transition matrix rows sum to 100. The likelihood of staying in the same employment status conditional on the base year employment status is highlighted in gray. The share of stayers (proportion of workers who remain in their work status) is calculated as the product of highlighted diagonals and initial size.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table 3

Employment transitions

Multinomial logistic regressionNumber of obs = 7,816
Average marginal effects on work status in t = 1Log-likelihood = −7,851.1291
Base outcome: Lower-tier informal wage employedPseudo R2 = 0.3353
(1)(2)(3)(4)(5)
VariablesFormal wage employedUpper-tier informal wage employedLower-tier informal wage employedFormal self-employedUpper-tier informal self-employed
Work status in t = 0 (base: lower-tier informal self-employed)
(1) Formal wage employed0.628*** (0.028)0.037** (0.016)−0.066** (0.033)−0.128*** (0.014)−0.096*** (0.029)
(2) Upper-tier informal wage employed0.293*** (0.026)0.192*** (0.015)0.044 (0.033)−0.099*** (0.014)−0.078*** (0.028)
(3) Lower-tier informal wage employed0.153*** (0.008)0.062** (0.024)0.264*** (0.042)−0.104*** (0.016)−0.062** (0.025)
(4) Formal self-Employed−0.045* (0.026)−0.007 (0.023)−0.079*** (0.020)0.227*** (0.033)0.043 (0.044)
(5) Upper-tier informal self-employed−0.012 (0.024)0.028 (0.022)−0.023 (0.030)0.016 (0.014)0.201*** (0.056)
Level of education (base: no schooling)
Primary0.053*** (0.018)0.001 (0.009)−0.089*** (0.025)0.023*** (0.006)0.001 (0.004)
Post-primary0.121*** (0.023)0.011 (0.026)−0.160*** (0.033)0.050*** (0.005)0.004 (0.005)
Secondary0.196*** (0.025)0.008 (0.022)−0.223*** (0.034)0.052*** (0.003)−0.002 (0.012)
Post-secondary0.246*** (0.028)0.026 (0.022)−0.283*** (0.036)0.096*** (0.020)−0.000 (0.012)
Tertiary0.342*** (0.024)−0.001 (0.019)−0.337*** (0.041)0.107*** (0.038)−0.016 (0.020)
Age0.003 (0.003)−0.002 (0.002)−0.010*** (0.003)0.006 (0.004)0.000 (0.002)
Age squared (×0.01)−0.002 (0.004)0.002 (0.003)0.009*** (0.003)−0.006 (0.005)−0.001 (0.003)
Female−0.037*** (0.009)0.029*** (0.003)−0.008 (0.011)−0.021*** (0.005)−0.016*** (0.001)
Urban0.029*** (0.006)−0.027*** (0.007)0.015 (0.018)0.007 (0.009)−0.013*** (0.004)
Country (base: Ghana)
South Africa0.122*** (0.006)0.037*** (0.007)0.005 (0.012)−0.010 (0.006)−0.020*** (0.003)
Tanzania0.112*** (0.018)−0.033*** (0.004)−0.019*** (0.006)0.017*** (0.002)−0.036*** (0.005)
Uganda−0.106*** (0.005)0.099*** (0.010)0.011 (0.007)−0.018*** (0.002)0.007*** (0.002)
Sample selection
Panel retention from t = 0 to t = 1−0.044** (0.020)−0.019** (0.009)−0.026* (0.015)−0.007 (0.011)−0.009 (0.013)
Employed (non-farm) in t = 00.011 (0.012)−0.002 (0.021)0.010 (0.022)0.005 (0.014)−0.025** (0.010)

Note:

*** p < 0.01,

** p < 0.05,

* p < 0.1. Standard errors clustered at the country level in parentheses.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Figure 2

Labor income dynamics.

Note: Each point shows the estimated marginal effect on changes in log earnings by initial and destination employment state, with “Informal Lower” and “Wage Employed” being the base categories. The dashed lines show the 95% confidence intervals.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

Table A1

Data sources

CountrySurveyt = 0t = 1
GhanaGSPSWave I (2009/10)Wave II (2013/14)
South AfricaNIDSWave IV (2014/15)Wave V (2017)
TanzaniaTZNPSWave II (2010/11)Wave III (2012/13)
UgandaUNPSWave II (2010/11)Wave III (2011/12)

[i] Source: Authors’ own construct.

[ii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B1

Basic socioeconomic, labor market and institutional indicators, 2010–2017

GhanaSouth AfricaTanzaniaUganda
GDP per capita
Annual (constant 2017 PPP $)4,50512,7312,2562,004
Growth rate (annual %)4.40.43.41.7
Sectoral contribution to GDP (% of GDP)
Agriculture21.92.226.626.2
Industry28.626.625.125.5
Services42.861.140.642.0
Poverty headcount (% of population)
$1.90 a day (2011 PPP)12.017.549.538.5
$3.20 a day (2011 PPP)30.136.578.268.5
Educational attainment (% of population 25+ years) (cumulative)
At least completed primary64.781.464.838.4
At least completed lower secondary54.374.511.026.4
At least completed upper secondary20.661.53.410.3
Sector employment (% of total) (modeled ILO estimate)
Agriculture41.65.068.370.1
Industry16.223.76.17.2
Services42.271.325.522.6
Public sector employment
Public sector employment as a share of formal employment (%)45.422.749.839.5
Union membership
Share of private paid employees with union membership (%)17.520.49.43.0
Ease of doing business
Score (0 = lowest performance to 100 = best performance)57.865.752.557.3
Number of start-up procedures to register a business7.66.511.314.0
Days required to start a business12.945.329.526.8
New business density (registrations per 1,000 people ages 15–64)1.07.20.30.9
Quality of institutions
Governance quality index (1–10)6.56.15.25.7
Regulatory performance in paying taxes (1–100)66.381.253.873.0
Workers’ Rights (1–100)79.086.071.070.0

[i] Note: Calculated averages for the 2010–2017 study period. The reported public sector employment as a share of formal employment is in 2012 for Ghana, 2014 for South Africa, 2012 for Tanzania, and 2016 for Uganda.

[ii] Source: Authors’ calculations based on data from World Bank (2021), ILO (2021), and Teorell et al. (2021).

[iii] GDP, gross domestic product; PPP, Purchasing power parity.

Table B2

Distribution of workers by work status (%), extended definition

GhanaSouth AfricaTanzaniaUganda
a) Proportion of employment by work status (incl. family farms and unemployment)
Wage employedFormal6.844.33.94.0
InformalUpper2.87.01.13.7
Lower9.816.79.58.8
Self-employedFormal4.63.13.01.1
InformalUpper6.24.21.32.0
Lower21.72.914.414.5
Family farms43.40.965.565.0
Unemployment4.821.01.31.0
TOTAL100100100100
b) Proportion of formal vs. informal employment (incl. family farms as informal lower)
Formal12.059.97.05.1
InformalUpper9.414.22.45.7
Lower78.625.990.689.2
TOTAL100100100100

[i] Note: For each country, summary statistics are compiled for the initial wave of panel study under study.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10, NIDS 2014/15, TZNPS 2010/11, and UNPS 2010/11.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B3

Change in distribution of workers by work status, balanced panel

GhanaSouth AfricaTanzaniaUganda
a) Change (ppts) in proportion of employment by work status
Wage employedFormal1.7−0.45.0−2.7
InformalUpper−2.51.6−2.40.0
Lower−3.8−3.3−0.40.7
Self-employedFormal0.82.0−2.81.3
InformalUpper−1.5−0.50.70.5
Lower5.30.6−0.10.3
b) Change (ppts) in proportion of formal and informal employment
Formal2.51.52.3−1.5
InformalUpper−4.01.1−1.70.5
Lower1.5−2.6−0.51.0
c) Change (ppts) in proportion of self-employment
Self-employed4.62.1−2.22.1

[i] Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

[ii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B4

Average worker characteristics by work status

GhanaSouth AfricaTanzaniaUganda
a) Average age (years)
Wage employedFormal43.5 (0.53)37.5 (0.16)40.5 (0.52)36.1 (0.71)
InformalUpper36.4 (0.82)35.6 (0.37)33.4 (1.00)34.7 (0.84)
Lower38.4 (0.46)35.4 (0.25)30.3 (0.35)30.5 (0.53)
Self-employedFormal41.5 (0.64)41.3 (0.72)37.5 (0.54)34.8 (1.29)
InformalUpper40.3 (0.53)40.2 (0.54)34.7 (0.83)38.8 (0.95)
Lower40.8 (0.29)38.6 (0.69)31.0 (0.33)34.8 (0.47)
TOTAL40.5 (0.19)37.2 (0.12)32.7 (0.20)34.1 (0.29)
b) Share of female workers (%)
Wage employedFormal33.7 (2.41)41.5 (0.75)32.5 (2.15)41.3 (3.77)
InformalUpper30.0 (3.55)57.0 (1.65)35.5 (4.33)34.3 (3.80)
Lower33.8 (1.91)44.3 (1.09)34.0 (1.55)26.8 (2.12)
Self-employedFormal47.9 (3.24)45.8 (3.00)36.0 (2.83)39.7 (6.60)
InformalUpper50.0 (2.67)40.3 (2.25)25.4 (3.73)29.4 (4.25)
Lower81.7 (1.08)58.4 (2.96)63.9 (1.31)47.9 (1.85)
TOTAL56.8 (0.90)44.2 (0.55)46.7 (0.87)38.9 (1.19)
c) Share of workers with secondary or tertiary education (%)
Wage employedFormal52.2 (3.02)63.7 (0.74)36.4 (2.29)60.1 (3.88)
InformalUpper37.8 (4.04)55.5 (1.66)39.9 (4.76)59.7 (4.09)
Lower19.1 (1.76)28.0 (0.98)1.2 (0.36)11.8 (1.66)
Self-employedFormal18.6 (2.80)69.3 (2.78)2.4 (0.91)42.9 (6.74)
InformalUpper10.0 (1.82)28.6 (2.07)3.3 (1.56)37.3 (4.59)
Lower8.3 (0.95)33.0 (2.82)1.7 (0.38)12.2 (1.29)
TOTAL19.0 (0.83)52.5 (0.55)7.1 (0.47)25.8 (1.13)

[i] Note: For each country, summary statistics are compiled for the initial wave of panel study under study. Standard errors of mean values in parentheses.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10, NIDS 2014/15, TZNPS 2010/11, and UNPS 2010/11.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B5

Transition matrices across work status groups, including additional destination states (family farms under lower-tier informal self-employment and unemployment)

WAVE t = 1Share of stayers
Wage employedSelf-employedUnempl.
FormalInformalFormalInformal
UpperLowerUpperLower
a) Ghana
WAVE t = 0Wage employedFormal59.06.28.73.93.216.72.27.8
InformalUpper25.79.218.52.02.540.51.60.5
Lower15.53.822.95.44.541.26.84.3
Self-employedFormal1.11.76.214.98.064.24.01.3
InformalUpper2.21.38.28.024.252.43.82.9
Lower0.80.86.52.82.683.53.134.9
TOTAL11.92.610.55.26.459.73.751.7
b) South Africa
WAVE t = 0Wage employedFormal78.96.75.52.11.00.75.144.7
InformalUpper42.021.012.45.00.92.716.11.9
Lower22.010.939.83.93.23.916.28.5
Self-employedFormal10.88.04.242.011.08.515.51.7
InformalUpper9.99.015.813.119.114.318.81.0
Lower10.04.211.44.716.721.231.90.8
TOTAL56.98.913.44.73.13.010.158.6
c) Tanzania
WAVE t = 0Wage employedFormal71.94.08.81.40.912.70.48.4
InformalUpper40.55.129.25.72.515.91.10.2
Lower11.10.746.72.22.635.90.813.4
Self-employedFormal1.60.04.125.814.853.60.02.3
InformalUpper3.80.018.512.919.645.20.00.8
Lower3.81.09.95.42.774.82.532.5
TOTAL16.51.320.46.44.549.61.357.5
d) Uganda
WAVE t = 0Wage employedFormal57.726.88.15.20.02.20.06.8
InformalUpper17.843.112.65.15.516.00.04.7
Lower3.24.246.11.82.941.40.512.0
Self-employedFormal2.60.010.119.814.353.30.00.6
InformalUpper0.03.74.011.232.149.10.01.8
Lower1.20.56.32.33.885.40.536.4
TOTAL10.29.116.73.95.454.30.362.3

[i] Note: Each row indicates work status in the base period, and each column in transition matrices indicates work status in the next period; transition matrix rows sum to 100. The likelihood of staying in the same employment status conditional on the base year employment status is highlighted in gray. The share of stayers (proportion of workers who remain in their work status) is calculated as the product of highlighted diagonals and initial size.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/12, and UNPS 2010/11-2011/12.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B6

(Non-farm) employment and panel retention rates (%)

GhanaSouth AfricaTanzaniaUganda
Employed (non-farm)Panel retentionEmployed (non-farm)Panel retentionEmployed (non-farm)Panel retentionEmployed (non-farm)Panel retention
Percentage share51.770.878.175.933.269.134.071.9

[i] Note: The dummy variable capturing (non-farm) employment equals one if the individual is working in formal or informal wage or self-employment and zero if working on a family farm or is unemployed. For individuals who responded to the employment module in t = 0, the dummy variable capturing panel retention equals one if the individual was successfully re-interviewed in the employment module in t = 1, and zero otherwise.

[ii] Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

[iii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B7

Probability of employment (non-farm) in the baseline and panel retention

VariablesGhanaSouth AfricaTanzaniaUganda
(1)(2)(1)(2)(1)(2)(1)(2)
Employed (non-farm)Panel retentionEmployed (non-farm)Panel retentionEmployed (non-farm)Panel retentionEmployed (non-farm)Panel retention
Level of education (base: no schooling)
Primary0.164* (0.086)−0.044 (0.080)−0.040 (0.025)0.013 (0.024)0.091*** (0.013)0.014 (0.013)−0.052** (0.022)0.004 (0.020)
Post-primary0.216** (0.085)−0.034 (0.079)−0.047* (0.024)0.013 (0.023)0.332*** (0.019)0.014 (0.018)0.108*** (0.029)−0.033 (0.026)
Secondary0.328*** (0.088)−0.044 (0.082)0.001 (0.024)0.010 (0.024)0.602*** (0.038)0.127*** (0.032)0.089** (0.035)−0.030 (0.031)
Post-secondary0.506*** (0.093)−0.018 (0.090)0.069*** (0.025)−0.013 (0.025)0.556*** (0.045)0.024 (0.045)0.356*** (0.040)−0.041 (0.037)
Tertiary0.521*** (0.091)−0.081 (0.089)0.160*** (0.028)−0.022 (0.032)0.593*** (0.063)0.145*** (0.040)0.124** (0.063)−0.111* (0.059)
Age0.033*** (0.004)0.052*** (0.003)0.026*** (0.002)0.010*** (0.002)0.004* (0.002)0.031*** (0.002)0.010*** (0.003)0.027*** (0.003)
Age squared (×0.01)−0.042*** (0.005)−0.064*** (0.004)−0.024*** (0.003)−0.013*** (0.003)−0.010*** (0.003)−0.039*** (0.003)−0.016*** (0.004)−0.030*** (0.004)
Female0.189*** (0.017)−0.015 (0.014)−0.089*** (0.008)0.061*** (0.008)−0.001 (0.011)−0.074*** (0.010)−0.115*** (0.015)0.019 (0.013)
Urban0.264*** (0.012)−0.032** (0.015)0.113*** (0.008)−0.011 (0.008)0.375*** (0.007)−0.092*** (0.011)0.340*** (0.015)−0.050*** (0.016)
Head of household0.268*** (0.018)0.106*** (0.008)0.108*** (0.012)0.140*** (0.017)
Sample member in the previous waven.a.
n.a.
0.234*** (0.008)0.044*** (0.012)0.073*** (0.016)
Wald test of rho = 015.21610.08617.3139.811
F-statistic (p-value)0.0000.0020.0000.002
Observations6,71821,4987,8704,315

Note:

*** p < 0.01,

** p < 0.05,

* p < 0.1. Standard errors clustered at the country level in parentheses.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B8

Excludability of instruments from main employment dynamics equation

Head of householdSample member in the previous wave
F-statistic (p-value)0.18000.9647

[i] Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

[ii] GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B9

Employment dynamics, including inactivity/unemployment as an additional destination state

Multinomial logistic regressionNumber of obs = 9,851
Average marginal effects on work status in t = 1Log-likelihood = −12,048
Base outcome: Lower-tier informal wage employedPseudo R2 = 0.284
Variables(1)(2)(3)(4)(5)(6)
Formal wage employedUpper-tier informal wage employedLower-tier informal wage employedFormal self-employedUpper-tier informal self-employedInactive/unemployed
Work status in t = 0 (base: lower-tier informal self-employed)
(1) Formal wage employed0.584*** (0.016)0.051*** (0.009)−0.002 (0.020)−0.070*** (0.009)−0.052*** (0.018)−0.271*** (0.012)
(2) Upper-tier informal wage employed0.264*** (0.011)0.168*** (0.007)0.084*** (0.019)−0.048*** (0.009)−0.038** (0.017)−0.210*** (0.022)
(3) Lower-tier informal wage employed0.130*** (0.008)0.053*** (0.013)0.228*** (0.023)−0.054*** (0.010)−0.028* (0.015)−0.137*** (0.019)
(4) Formal self-employed−0.006 (0.012)0.006 (0.013)−0.022* (0.012)0.195*** (0.024)0.051* (0.027)−0.168*** (0.017)
(5) Upper-tier informal self-employed0.008 (0.010)0.023** (0.011)0.008 (0.023)0.027** (0.013)0.151*** (0.044)−0.101*** (0.038)
Level of education (base: no schooling)
Primary0.035** (0.016)0.001 (0.007)−0.065** (0.027)0.018*** (0.005)0.002 (0.004)−0.003 (0.018)
Post-primary0.093*** (0.017)0.012 (0.020)−0.113*** (0.032)0.040*** (0.004)0.006 (0.005)−0.021 (0.019)
Secondary0.157*** (0.024)0.011 (0.017)−0.157*** (0.033)0.042*** (0.003)0.001 (0.009)−0.036** (0.015)
Post-secondary0.219*** (0.028)0.031* (0.019)−0.204*** (0.035)0.082*** (0.017)0.005 (0.010)−0.072*** (0.014)
Tertiary0.329*** (0.029)0.013 (0.014)−0.249*** (0.040)0.088*** (0.032)−0.009 (0.018)−0.099*** (0.023)
Age0.015*** (0.004)0.002 (0.001)−0.001 (0.001)0.006* (0.003)0.002 (0.002)−0.030*** (0.006)
Age squared (×0.01)−0.018*** (0.004)−0.003 (0.002)−0.001 (0.001)−0.006* (0.004)−0.003 (0.002)0.038*** (0.006)
Female−0.050*** (0.010)0.016*** (0.003)−0.028* (0.016)−0.023*** (0.003)−0.019*** (0.001)0.078*** (0.024)
Urban0.012*** (0.004)−0.022*** (0.005)0.015 (0.016)0.006 (0.007)−0.009*** (0.004)0.018 (0.013)
Country (base: Ghana)
South Africa0.085*** (0.007)0.020*** (0.003)−0.035*** (0.008)−0.020*** (0.005)−0.032*** (0.002)0.107*** (0.006)
Tanzania0.162*** (0.017)−0.021*** (0.004)0.030*** (0.006)0.026*** (0.002)−0.024*** (0.004)−0.188*** (0.005)
Uganda−0.053*** (0.003)0.100*** (0.009)0.042*** (0.007)−0.009*** (0.002)0.016*** (0.002)−0.151*** (0.009)
Sample selection
Panel retention From t = 0 to t = 1−0.037 (0.039)−0.020* (0.012)−0.033*** (0.012)−0.012 (0.009)−0.015* (0.008)0.031 (0.030)
Employed (non-farm) in t = 0−0.034 (0.033)−0.009 (0.013)−0.003 (0.022)0.001 (0.013)−0.022*** (0.007)0.087 (0.056)

Note:

*** p < 0.01,

** p < 0.05,

* p < 0.1. Standard errors clustered at the country level in parentheses.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B10

Employment dynamics, using ordered logistic regression

Ordered logistic regression, average marginal effects, split sample
(1)(2)(3)
Formality status in t = 0Lower-tier informalUpper-tier informalFormal
Formality status in t = 1FormalUpper-tier informalFormalLower-tier informalUpper-tier informalLower-tier informal
Variables
Employment status (base: Wage employed)
Self-employed−0.036 (0.026)−0.013 (0.012)−0.122** (0.057)0.114** (0.055)0.081*** (0.007)0.185*** (0.034)
Level of education (base: no schooling)
Primary0.033 (0.020)0.019** (0.008)0.022 (0.021)−0.033 (0.035)−0.034* (0.020)−0.125* (0.073)
Post-primary0.121** (0.053)0.056*** (0.011)0.117 (0.080)−0.145 (0.109)−0.069*** (0.016)−0.197*** (0.055)
Secondary0.208*** (0.074)0.077*** (0.005)0.238*** (0.068)−0.245*** (0.093)−0.092*** (0.020)−0.232*** (0.055)
Post-secondary0.281*** (0.043)0.084*** (0.004)0.328*** (0.076)−0.300*** (0.096)−0.114*** (0.024)−0.263*** (0.059)
Tertiary0.575*** (0.064)0.048** (0.023)0.554*** (0.101)−0.395*** (0.084)−0.133*** (0.024)−0.286*** (0.054)
Age0.003 (0.004)0.001 (0.001)0.013 (0.010)−0.011 (0.009)−0.004** (0.002)−0.007** (0.003)
Age squared (×0.01)−0.002 (0.004)−0.001 (0.001)−0.014 (0.009)0.012 (0.009)0.004* (0.002)0.006* (0.004)
Female−0.066** (0.031)−0.023*** (0.005)−0.014 (0.048)0.013 (0.044)0.019*** (0.005)0.034*** (0.009)
Urban0.021* (0.012)0.007 (0.006)0.046** (0.019)−0.042** (0.018)0.001 (0.007)0.003 (0.013)
Country (base: Ghana)
South Africa0.102*** (0.015)0.036*** (0.009)0.068*** (0.010)−0.061*** (0.010)−0.058*** (0.012)−0.122*** (0.004)
Tanzania0.038 (0.031)0.016** (0.007)0.027 (0.035)−0.026 (0.033)−0.049*** (0.004)−0.106*** (0.008)
Uganda−0.040*** (0.010)−0.021* (0.012)−0.080*** (0.014)0.090*** (0.015)0.013*** (0.001)0.045*** (0.005)
Sample selection
Panel retention From t = 0 to t = 1−0.144* (0.082)−0.049*** (0.014)−0.024 (0.044)0.021 (0.040)0.026* (0.014)0.045 (0.030)
Employed (non-farm) in t = 00.013 (0.023)0.004 (0.009)0.090*** (0.030)−0.082*** (0.026)0.025* (0.014)0.043* (0.024)
Observations2,8691,1663,781
Pseudo R20.07280.06140.1220

Note:

*** p < 0.01,

** p < 0.05,

* p < 0.1. Standard errors clustered at the country level in parentheses. We group together workers in wage and self-employment and define the individual's formality status, Fi, on an ordinal scale, taking on three possible values: lower-tier informal employment, Fi = 1; upper-tier informal employment Fi = 2 ; and formal employment, Fi = 3. We split the sample by the formality status at time t = 0 and express the formality status at time t = 1 as a function of the same set of initial worker attributes Xi0.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Table B11

Change in log labor earnings

All countriesExcl. South Africa
Variables(1)(2)(3)(4)
Log labor earnings (t = 0)−0.335*** (0.057)−0.334** (0.058)−0.375* (0.123)−0.375* (0.124)
Formality status in t = 0 (base: Lower informal in t = 0)
Formal (t = 0)−0.033 (0.037)−0.033 (0.035)0.018 (0.045)0.016 (0.044)
Upper informal (t = 0)−0.023 (0.023)−0.025 (0.024)0.016 (0.031)0.021 (0.030)
Formality status in t = 0 and t = 1 (base: Lower informal in t = 0 and t = 1)
Formal (t = 0) × Formal (t = 1)0.337** (0.081)0.330** (0.077)0.240 (0.101)0.243 (0.110)
Formal (t = 0) × Upper informal (t = 1)0.136 (0.076)0.133 (0.073)0.014 (0.080)0.013 (0.087)
Upper informal (t = 0) × Formal (t = 1)0.257*** (0.029)0.256*** (0.030)0.265** (0.035)0.260** (0.045)
Upper informal (t = 0) × Upper informal (t = 1)0.071 (0.057)0.070 (0.056)0.109 (0.118)0.099 (0.121)
Lower informal (t = 0) × Formal (t = 0)0.206*** (0.022)0.206*** (0.021)0.211* (0.054)0.212* (0.054)
Lower informal (t = 0) × Upper informal (t = 0)0.082* (0.029)0.095* (0.033)0.067 (0.062)0.069 (0.045)
Employment status in t = 0 (base: Wage employed in t = 0)
Self-employed (t = 0)0.045 (0.106)−0.091** (0.014)
Employment status in t = 0 and t = 1 (base: Wage employed in t = 0 and t = 1)
Self-employed (t = 0) × Self-employed (t = 0)−0.090 (0.054)−0.021 (0.041)
Wage employed (t = 0) × Self-employed (t = 0)0.015 (0.104)−0.067 (0.087)
Characteristics in t = 0
Level of education (base: No schooling)
Primary0.058 (0.036)0.061 (0.031)0.076 (0.036)0.076 (0.029)
Post-primary0.103** (0.022)0.106*** (0.018)0.104* (0.033)0.108* (0.032)
Secondary0.205*** (0.035)0.207*** (0.032)0.212* (0.054)0.219* (0.063)
Post-secondary0.328*** (0.039)0.332*** (0.037)0.227** (0.045)0.236** (0.055)
Tertiary0.542*** (0.089)0.544*** (0.088)0.474* (0.143)0.482* (0.154)
Age0.005 (0.004)0.004 (0.003)0.004 (0.009)0.003 (0.008)
Age squared (×0.01)−0.004 (0.004)−0.004 (0.004)−0.002 (0.009)−0.001 (0.008)
Female−0.134** (0.029)−0.135** (0.030)−0.152 (0.082)−0.157 (0.083)
Urban0.076** (0.023)0.076** (0.023)0.095 (0.064)0.100 (0.062)
Country (base: Uganda)
South Africa0.110 (0.052)0.102 (0.067)
Tanzania0.073 (0.033)0.067 (0.036)0.096 (0.094)0.097 (0.099)
Uganda−0.014 (0.018)−0.021 (0.023)0.013 (0.058)0.013 (0.065)
Sample selection
Panel retention From t = 0 to t = 1−0.021 (0.029)−0.018 (0.024)−0.136 (0.149)−0.140 (0.140)
Employed (non-farm) in t = 00.005 (0.010)0.005 (0.011)−0.044 (0.115)−0.038 (0.114)
Constant1.500** (0.269)1.504** (0.269)1.765* (0.490)1.805* (0.484)
Observations7,2407,2402,7602,760
Adj. R20.3710.3760.3820.384

Note:

*** p < 0.01,

** p < 0.05,

* p < 0.1. Standard errors clustered at the country level in parentheses.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12.

GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Figure C1

ANOVA of log mean labor income (in 2005 PPPs) across work status groups.

Note: Coefficient estimates and 95% confidence interval of fitted one-way ANOVA model of log mean labor income using formal self-employment as the base category, controlling for wave fixed effects.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12. GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; PPP, Purchasing power parity; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Figure C2

Marginal effect on employment transition probabilities, by country and destination state.

Note: Average marginal effects estimated from same model specification and controls as in Table 3 but including interactions between the initial work status and country fixed effects. Each point shows the estimated marginal effect on the employment transition probability by country and destination state, with “lower-tier informal self-employed” being the base category in each country. The dashed lines show the 95% confidence intervals. Work status abbreviations: F, formal, IF U, informal upper-tier, IF L, informal lower-tier; SE, self-employed; WE, wage employed.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12. GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Figure C3

Coefficient estimate on change in log earnings, split-sample regressions.

Note: Coefficient estimates based on same model specification and controls as in Table B10, but splitting the sample by initial formality status (formal, upper-tier informal, lower-tier informal) and initial occupational position (wage employed, self-employed). Standard errors have been clustered at the country level. Each point shows the estimated marginal effect on log earnings by employment state, with “Informal Lower” and “Wage Employed” being the base categories. The dashed lines show the 95% confidence intervals.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12. GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Figure C4

Coefficient estimate on log earnings, panel fixed effects regression.

Note: Coefficient estimates based on fixed effects panel regression, controlling for individual's age and age squared and country-time fixed effects. Standard errors have been clustered at the country level. Each point shows the estimated marginal effect on log earnings by employment state, with “Informal Lower” and “Wage Employed” being the base categories. The dashed lines show the 95% confidence intervals.

Source: Authors’ own calculations based on survey data from GSPS 2009/10-2013/14, NIDS 2014/15-2017, TZNPS 2010/11-2012/13, and UNPS 2010/11-2011/12. GSPS, Ghana Socioeconomic Panel Study Survey; NIDS, National Income Dynamics Study; TZNPS, Tanzania National Panel Study; UNPS, Uganda National Panel Study.

Language: English
Accepted on: May 27, 2021
Published on: Nov 20, 2021
Published by: Sciendo
In partnership with: Paradigm Publishing Services
JEL:

© 2021 Michael Danquah, Simone Schotte, Kunal Sen, published by Sciendo
This work is licensed under the Creative Commons Attribution 4.0 License.