Poverty and Earnings Mobility in Three African Countries
Posted: 19 Jan 2009
Date Written: November 7, 2008
This paper investigates whether workers increase their income by moving across or moving within their employment status. Using unique panel data for three Sub-Saharan African countries - Ethiopia, Ghana and Tanzania - the authors compare the determinants of earnings for formal-sector and self-employed workers and find that their life-cycle earnings profile is remarkably similar when workers from the same firm size are compared. Whether a job is a 'good job' thus has to do a lot with firm size, confirming results from other countries in Africa. When investigating mobility across sectors, this turns out to be limited, suggesting that the labor market may indeed be segmented along employment status. Combined, these findings suggest that people increase their income on the same type of job, rather than through movements across sectors to a better job. Given that these results can only be obtained from panel data, an important message from the paper is that there is a need for this type of data. The chapter also raises other methodological issues, underlining that we can measure the income of the self-employed, and that combining labor and poverty analysis raises questions on how to compare income, which is typically measured at the individual level, with consumption, which is measured at the household level.
Suggested Citation: Suggested Citation