Labor Productivity in the Informal Sector: Necessity vs. Opportunity Firms

8 Pages Posted: 19 Jan 2010

See all articles by Mohammad Amin

Mohammad Amin

World Bank - Enterprise Analysis Unit

Date Written: January 19, 2010

Abstract

Differences between opportunity and necessity firms within the informal sector have long been debated. This paper revisits this debate using a new dataset of informal firms in three African countries. Focusing on average productivity of labor, a measure of firm efficiency, we find that it is much higher for opportunity compared with necessity firms. However, this difference between necessity and opportunity firms holds only within the sample of manufacturing firms. For firms in the service sector, there is no such difference.

Keywords: Informality, Entrepreneurship, Labor Productivity

JEL Classification: J17, L26, L21

Suggested Citation

Amin, Mohammad, Labor Productivity in the Informal Sector: Necessity vs. Opportunity Firms (January 19, 2010). Available at SSRN: https://ssrn.com/abstract=1539168 or http://dx.doi.org/10.2139/ssrn.1539168

Mohammad Amin (Contact Author)

World Bank - Enterprise Analysis Unit ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

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