Self-Employment in the Developing World

This paper analyzes heterogeneity among the self-employed in 74 developing countries, representing two thirds of the population of the developing world. After profiling how worker characteristics vary by employment status, we classify self-employed workers outside of agriculture as “successful” or “...

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Main Authors:	Gindling, T. H., Newhouse, David
Format:	Working Paper
Language:	en_US
Published:	World Bank, Washington, DC 2013
Subjects:	Self-employment informality entrepreneurship Development
Online Access:	http://hdl.handle.net/10986/12146

id	okr-10986-12146
recordtype	oai_dc
spelling	okr-10986-121462021-04-23T14:02:59Z Self-Employment in the Developing World Gindling, T. H. Newhouse, David Self-employment informality entrepreneurship Development This paper analyzes heterogeneity among the self-employed in 74 developing countries, representing two thirds of the population of the developing world. After profiling how worker characteristics vary by employment status, we classify self-employed workers outside of agriculture as “successful” or “unsuccessful” entrepreneurs, based on two measures of success: Whether the worker is an employer, and whether they reside in a non-poor household. Four main findings emerge. First, jobs exhibit a clear pecking order, with household welfare and worker education highest for employers, followed by wage and salaried employees, non-agricultural own-account workers, non-agricultural unpaid family workers, and finally agricultural workers. Second, a substantial minority of own-account workers reside in non-poor households, suggesting that their profits are often a secondary source of household income. Third, as per capita income increases, the structure of employment shifts rapidly, first out of agriculture into unsuccessful non-agricultural self-employment, and then mainly into non-agricultural wage employment. Finally, roughly one third of the unsuccessful entrepreneurs share similar characteristics with their successful counterparts, suggesting they have the potential to be successful but face constraints to growth. We conclude that although interventions such as access to credit can benefit a substantial portion of the self-employed, effectively targeting the minority of self-employed with higher growth potential is important, particularly in low-income contexts. The results also highlight the potential benefits of policies that facilitate shifts in the nature of work, first from agricultural labor into non-agricultural self-employment, and then into wage and salaried jobs. 2013-01-18T20:18:44Z 2013-01-18T20:18:44Z 2012-10 http://hdl.handle.net/10986/12146 en_US Background Paper for the World Development Report 2013; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	Self-employment informality entrepreneurship Development
spellingShingle	Self-employment informality entrepreneurship Development Gindling, T. H. Newhouse, David Self-Employment in the Developing World
relation	Background Paper for the World Development Report 2013;
description	This paper analyzes heterogeneity among the self-employed in 74 developing countries, representing two thirds of the population of the developing world. After profiling how worker characteristics vary by employment status, we classify self-employed workers outside of agriculture as “successful” or “unsuccessful” entrepreneurs, based on two measures of success: Whether the worker is an employer, and whether they reside in a non-poor household. Four main findings emerge. First, jobs exhibit a clear pecking order, with household welfare and worker education highest for employers, followed by wage and salaried employees, non-agricultural own-account workers, non-agricultural unpaid family workers, and finally agricultural workers. Second, a substantial minority of own-account workers reside in non-poor households, suggesting that their profits are often a secondary source of household income. Third, as per capita income increases, the structure of employment shifts rapidly, first out of agriculture into unsuccessful non-agricultural self-employment, and then mainly into non-agricultural wage employment. Finally, roughly one third of the unsuccessful entrepreneurs share similar characteristics with their successful counterparts, suggesting they have the potential to be successful but face constraints to growth. We conclude that although interventions such as access to credit can benefit a substantial portion of the self-employed, effectively targeting the minority of self-employed with higher growth potential is important, particularly in low-income contexts. The results also highlight the potential benefits of policies that facilitate shifts in the nature of work, first from agricultural labor into non-agricultural self-employment, and then into wage and salaried jobs.
format	Publications & Research :: Working Paper
author	Gindling, T. H. Newhouse, David
author_facet	Gindling, T. H. Newhouse, David
author_sort	Gindling, T. H.
title	Self-Employment in the Developing World
title_short	Self-Employment in the Developing World
title_full	Self-Employment in the Developing World
title_fullStr	Self-Employment in the Developing World
title_full_unstemmed	Self-Employment in the Developing World
title_sort	self-employment in the developing world
publisher	World Bank, Washington, DC
publishDate	2013
url	http://hdl.handle.net/10986/12146
_version_	1764419194105888768

Self-Employment in the Developing World

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