Labor Informality and Market Segmentation in Senegal
Understanding the selection of workers into informality is a policy priority to design programs to increase formalization across Sub-Saharan Africa, where nine out of ten workers are informal. This paper estimates a model of self-selection with ent...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/099437007262219892/IDU0acf8d436078b904faa094620e585bc791ecd http://hdl.handle.net/10986/37775 |
| Summary: | Understanding the selection of
workers into informality is a policy priority to design
programs to increase formalization across Sub-Saharan
Africa, where nine out of ten workers are informal. This
paper estimates a model of self-selection with entry
barriers into the formal sector to identify the extent of
involuntary informality in Senegal, a representative country
in terms of levels of informality in West Africa and with
one of the most rigid labor markets in the world. The
results show that the desire of being formal is greater for
workers with formal education, married, and a lower
proportion of children younger than age five living in the
household. The individual's preference for the formal
sector also grows with age at a decreasing rate. The results
also show that labor informality is mainly a voluntary
phenomenon, with 30 percent of informal workers being
involuntarily displaced into the informal sector. The
results are robust to different model specifications,
definitions of labor informality, and heterogeneous groups
of workers. |
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