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Informal Sector Heterogeneity and Income Inequality: Evidence from The Democratic Republic of Congo

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  • Adoho, Franck M.

    (The World Bank, USA)

  • Doumbia, Djeneba

    (The World Bank, USA)

Abstract

This paper empirically identifies three types of entrepreneurs in the Congolese informal sector, namely top-performers, constrained gazelles and survivalists. Based on logit and fixed effect OLS models, the paper finds that poverty and income inequality are more common among constrained gazelles and survivalists. Results also show that income inequality is explained mainly by educational disparities and lack of credit access among entrepreneurs. The outcomes of a Blinder-Oaxaca decomposition show that the performance of firms is a key factor in explaining differences in income. Moreover, the paper finds that human capital and managerial skills are important engines of performance.

Suggested Citation

  • Adoho, Franck M. & Doumbia, Djeneba, 2022. "Informal Sector Heterogeneity and Income Inequality: Evidence from The Democratic Republic of Congo," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 47(4), pages 55-77, December.
    • Handle: RePEc:ris:jecdev:0003
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    References listed on IDEAS

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    Cited by:

    1. Ibale, Douglas Amuli & Docquier, Frédéric & Iftikhar, Zainab, 2024. "Spatial Inequality, Poverty and Informality in the Democratic Republic of the Congo," World Development, Elsevier, vol. 173(C).
    2. Jacques Sadiki & Stany Vwima & Philippe Lebailly, 2020. "Obstacles and Performance of Agribusiness Enterprises: Evidence from South-Kivu Eastern Democratic Republic of Congo," Asian Social Science, Canadian Center of Science and Education, vol. 16(11), pages 1-7, November.
    3. Damien Girollet, 2024. "Digital divides among microenterprises: Evidence from sub‐Saharan Africa," Journal of International Development, John Wiley & Sons, Ltd., vol. 36(2), pages 1350-1380, March.
    4. Damien GIROLLET, 2023. "Digital divides among microsized firms: Evidence from Sub-Saharan Africa," Bordeaux Economics Working Papers 2023-03, Bordeaux School of Economics (BSE).
    5. Angelucci, Manuela & Heath, Rachel & Noble, Eva, 2023. "Multifaceted programs targeting women in fragile settings: Evidence from the Democratic Republic of Congo," Journal of Development Economics, Elsevier, vol. 164(C).
    6. Jean-Philippe Berrou & Damien Girollet, 2019. "A la recherche des « gazelles » du secteur informel urbain africain. Entreprises et entrepreneurs à fort potentiel dans leur environnement socioéconomique et numérique," Working Papers hal-02507441, HAL.
    7. Héritier Mesa, 2021. "'We might all live the same life, but we are not the same'. Class and social Position in Kinshasa's second-hand clothing trade," ULB Institutional Repository 2013/313551, ULB -- Universite Libre de Bruxelles.

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    More about this item

    Keywords

    Informal Sector; Income Inequality; Poverty; Firm Performance.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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