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This paper reviews the evidence on how households in Sub-Saharan Africa segment along consumption, income and earning dimensions relevant for quantitative macroeconomic policy models which incorporate heterogeneity. Key findings include the importance of home-grown food in the income and consumption of house-holds well up the income distribution, the lack of formal financial inclusion for all but the richest households, and the importance of non-wage income. These stylized facts suggest that an externally-generated macroeconomic shock and the short-term policy response would mainly affect the behavior and welfare of these richer urban households, who are also more likely to have the means to cope. Middle class and poor households, especially in rural areas, should be insulated from these external shocks but vulnerable to a wide range of structural factors in the economy as well as idiosyncratic shocks.
Consumption (Economics) -- Africa, Sub-Saharan -- Econometric models. --- Equality -- Africa, Sub-Saharan. --- Income distribution -- Africa, Sub-Saharan. --- Labor supply -- Africa, Sub-Saharan. --- Wages -- Africa, Sub-Saharan. --- Business & Economics --- Economic History --- Labor --- Macroeconomics --- Personal Income, Wealth, and Their Distributions --- Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General --- Labor Economics: General --- Macroeconomic Analyses of Economic Development --- Fiscal and Monetary Policy in Development --- Aggregate Factor Income Distribution --- Wages, Compensation, and Labor Costs: General --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Labour --- income economics --- Income --- Personal income --- National accounts --- Economic theory --- Labor economics --- Ghana --- Income economics
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The household enterprise sector has a significant role in the Tanzanian economy. It employs a larger share of the urban labor force than wage employment, and is increasingly seen as an alternative to agriculture as a source of additional income for rural and urban households. The sector is uniquely placed within the informal sector, where it represents both conditions of informal employment and informal enterprise. This paper presents a case study on Tanzania using a mixed approach by combining both quantitative and qualitative analysis to examine the important role of household enterprises in the labor force of Tanzania, and to identify key factors that influence their productivity. Household enterprise owners are similar to typical labor force participants although primary education appears to be the minimum qualification for household enterprise operators to be successful. Access to location matters - good, secure location in a marketplace or industrial cluster raises earnings-and access to transport and electricity is found to have a significant effect on earnings as well. In large urban areas, the biggest constraint faced by household enterprises is the lack of access to secure workspace to run the small business. Although lack of credit is a problem across all enterprises in Tanzania, household enterprises are more vulnerable because they are largely left out of the financial sector either as savers or borrowers. Although HEs are part of the livelihood strategies of over half of households in Tanzania, they are ignored in the current development policy frameworks, which emphasize formalization, not productivity. Tanzania has a large number of programs and projects for informal enterprises, but there is no set of policies and program interventions targeted at the household enterprise sector. This gap exacerbates the vulnerability of household enterprises, and reduces their productivity.
Access to Finance --- Banks & Banking Reform --- Debt Markets --- Employment --- Female employment --- Household enterprises --- Informal economy --- Job creation --- Labor Markets --- Macroeconomics and Economic Growth --- Micro enterprises --- Population Policies --- Poverty Reduction --- Poverty reduction --- Returns to education and training --- Self-employment --- Youth --- Tanzania
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While Africa's recent decade of growth and poverty reduction performance has been lauded, concern has been expressed regarding the structure of this growth. In particular, questions have been raised about whether the growth is based on a commodities boom, or whether it is the beginning of a structural transformation that will lift workers from low-productivity jobs into higher-productivity ones. Macro evidence has suggested that the structural transformation has not started. But macro analysis misses the evidence that the process of transformation has started, because this process begins at the household level. Household livelihoods do not move from ones based on subsistence farming and household level economic activities into livelihoods based on individual wage and salary employment away from the household in one leap-this process takes generations. The intermediate step is the productive informal sector. It is income gains at the household level in this sector that fuel productivity increases, savings, and investment in human capital in this sector. Ensuring that most households are able to diversify their livelihoods into the non-farm sector through productive informality not only increases growth, but also allows the majority of the population to share in the growth process. This paper illustrates this point with the case of Uganda which followed this path and experienced two decades of sustained growth and poverty reduction.
Achieving Shared Growth --- Economic Theory & Research --- Labor Policies --- Macroeconomics and Economic Growth --- Non-farm household enterprises and Livelihood transformation --- Poverty Reduction --- Regional Economic Development --- Rural Poverty Reduction --- Structural transformation and Poverty reduction --- Sub-Sahara Africa --- Uganda
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The household enterprise sector has a significant role in the Tanzanian economy. It employs a larger share of the urban labor force than wage employment, and is increasingly seen as an alternative to agriculture as a source of additional income for rural and urban households. The sector is uniquely placed within the informal sector, where it represents both conditions of informal employment and informal enterprise. This paper presents a case study on Tanzania using a mixed approach by combining both quantitative and qualitative analysis to examine the important role of household enterprises in the labor force of Tanzania, and to identify key factors that influence their productivity. Household enterprise owners are similar to typical labor force participants although primary education appears to be the minimum qualification for household enterprise operators to be successful. Access to location matters - good, secure location in a marketplace or industrial cluster raises earnings-and access to transport and electricity is found to have a significant effect on earnings as well. In large urban areas, the biggest constraint faced by household enterprises is the lack of access to secure workspace to run the small business. Although lack of credit is a problem across all enterprises in Tanzania, household enterprises are more vulnerable because they are largely left out of the financial sector either as savers or borrowers. Although HEs are part of the livelihood strategies of over half of households in Tanzania, they are ignored in the current development policy frameworks, which emphasize formalization, not productivity. Tanzania has a large number of programs and projects for informal enterprises, but there is no set of policies and program interventions targeted at the household enterprise sector. This gap exacerbates the vulnerability of household enterprises, and reduces their productivity.
Access to Finance --- Banks & Banking Reform --- Debt Markets --- Employment --- Female employment --- Household enterprises --- Informal economy --- Job creation --- Labor Markets --- Macroeconomics and Economic Growth --- Micro enterprises --- Population Policies --- Poverty Reduction --- Poverty reduction --- Returns to education and training --- Self-employment --- Youth --- Tanzania
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Employment and earnings statistics are the key link between the size and structure of economic growth and the welfare of households, which is the ultimate goal of development policy, so it is important to monitor employment outcomes consistently. A cursory review of employment data for low-income Sub-Saharan African countries shows both large gaps and improbable variation within countries over time and among countries, suggesting that low quality data are routinely reported by national statistics offices. Unfortunately, policies are formed and projects developed and implemented on the basis of these statistics. Therefore, errors of measurement could be having profound implications on the strategic priorities and policies of a country. This paper explains the improbable results observed by using data from Uganda, where the labor module contains variation both within and across surveys, to show the sensitivity of employment outcomes to survey methodology. It finds that estimates of employment outcomes are unreliable if the questionnaire did not use screening questions, as labor force participation will be underestimated. Likewise, surveys that use a seven-day recall period underestimate or potentially misrepresent employment outcomes, owing to seasonality and multiple jobs. Common multivariate analysis applied on household survey data will be affected, as the errors in measurement in the dependent and independent variables will be correlated. Corrections to reduce measurement bias in existing data are tested with the survey data; none are found to be completely satisfactory. The paper concludes that there is a knowledge gap about employment outcomes in Sub-Saharan Africa that will continue unless collection techniques improve.
Educational Sciences --- Employment --- Gender and employment --- Labor force participation --- Labor force surveys --- Labor Markets --- Labor Policies --- Macroeconomics and Economic Growth --- Poverty Monitoring & Analysis --- Poverty Reduction --- Tertiary Education --- Sub-Saharan Africa
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Youth in many low-income countries are entering the labor force in unprecedented numbers, yet many struggle to secure rewarding livelihoods. This paper outlines the economic development challenges that constrain youth's transition into employment, and it parses the evidence on which programs and policies appear to speed that transition. It concludes that it may be time for a fundamental reassessment of approaches for addressing youth employment and the youth transition in low-income countries. Employment opportunities in low-income countries reflect the pace of economic and structural transformation. In designing strategies, policies, and programs to meet the entry-into-employment challenge for youth, the starting point is to diagnose the economy and current/future employment opportunities. Combined with the analysis of youth employment problems from a structural transformation perspective, evidence from rigorous evaluations of youth employment interventions provides new insight into which kinds of interventions are more likely to help youth succeed in certain contexts. The evidence reviewed here casts serious doubt on the efficacy and value of training interventions to help youth enter formal wage employment. The case is stronger for interventions that speed the transition to self-employment in farming or non-farm household enterprises. Support for development of transferable character skills and social integration among youth through positive youth development programs should be tested further for employment and earnings impacts, perhaps along with cash transfers to youth or access to finance. In reviewing the evidence on the cost-effectiveness and sustainability of youth employment impacts, the paper also notes the need for better measures of displacement and general equilibrium effects.
Employment --- Household Enterprises --- Informality --- Labor --- Labor Markets --- Labor Policies --- Poverty Reduction --- Skills --- Social Protections and Labor --- Structural Transformation --- Vocational Training --- Youth
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The concept of empowerment is now widely used in several disciplines to characterize the states and social processes of individuals and communities. In economic development, the concept has come to mean women's power and agency in all economic domains and market-related interactions-earning, spending, and saving income; buying, owning, and selling assets; holding and inheriting wealth; starting and operating a business; acquiring a bank account or credit; and participating in or leading a union or other form of economic collective action. Measurement has lagged conceptualization. Most analytical research by economists, primarily involving impact evaluation, has measured empowerment as women's influence over household expenditures. This is a very narrow sliver of empowerment; not surprisingly, it is not well correlated with other economic or social outcomes. This paper suggests measuring empowerment in eight facets (a 4 x 2 matrix): (a) attitudes and (b) behaviors, in the domains of (i) transactions and markets; (ii) social interactions, including mobility and reproductive freedom; (iii) political and civic participation, including exercising legal rights; and (iv) psychology, including self-confidence and ability to seek mental health.
Economic Empowerment --- Empowerment --- Human Rights --- Labor Market Outcomes
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While Africa's recent decade of growth and poverty reduction performance has been lauded, concern has been expressed regarding the structure of this growth. In particular, questions have been raised about whether the growth is based on a commodities boom, or whether it is the beginning of a structural transformation that will lift workers from low-productivity jobs into higher-productivity ones. Macro evidence has suggested that the structural transformation has not started. But macro analysis misses the evidence that the process of transformation has started, because this process begins at the household level. Household livelihoods do not move from ones based on subsistence farming and household level economic activities into livelihoods based on individual wage and salary employment away from the household in one leap-this process takes generations. The intermediate step is the productive informal sector. It is income gains at the household level in this sector that fuel productivity increases, savings, and investment in human capital in this sector. Ensuring that most households are able to diversify their livelihoods into the non-farm sector through productive informality not only increases growth, but also allows the majority of the population to share in the growth process. This paper illustrates this point with the case of Uganda which followed this path and experienced two decades of sustained growth and poverty reduction.
Achieving Shared Growth --- Economic Theory & Research --- Labor Policies --- Macroeconomics and Economic Growth --- Non-farm household enterprises and Livelihood transformation --- Poverty Reduction --- Regional Economic Development --- Rural Poverty Reduction --- Structural transformation and Poverty reduction --- Sub-Sahara Africa --- Uganda
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