Policy Research Working Paper 10703 - Urban Informality in Sub-Saharan Africa

Data and Definitions We are interested in understanding the nature of jobs, both in terms of the worker’s relationship to the firm owner and in terms of job benefits and earnings potential offered by the firm. [...] We assume that informal employees are to the left of LE-SE on the Figure 1 spectrum since they are at particularly risk to not receiving payment or being the first to lose the job if the firm faces economic hardship and being subject to work conditions decided by the employer and not regulated by the state.25 We assume that formal sector employees are to the right of HE-SE since they are recipient. [...] The estimated value of the parameters 𝛽𝛽𝑔𝑔1 indicate how the characteristics included in Xic relate to the probability of being an informal worker of type g with respect to being a worker of any other type, while the estimated value of the parameters 𝛽𝛽𝑔𝑔2 will provide the same information for job characteristics. [...] The new term Uic includes whether the household has access to electricity, to a computer and to improved water, as well as a poverty proxy based on whether a household is in the bottom 40 percent of the national per capita consumption distribution.34 The estimated value of the parameters 𝜃𝜃𝑔𝑔 will tell us how the urban infrastructure and services variables relate to the probability of being an. [...] The characteristics of the firms we measure are firm age, sector of activity, whether they operate outside household premises, the value of sales in the last month, the number of workers and productivity levels.