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Tanzanian formal sector workers' participation in informal production

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  • Theis Theisen

Abstract

A theoretical model is developed explaining formal sector workers participation in the informal sector. A reduced-form informal sector participation function is derived from a specific utility function, a specific informal sector production function, and a specific informal sector earnings function. The participation function can be estimated consistently, and provides a solution to the problem that informal sector 'wages' in developing countries are hard to observe. A sample of Tanzanian formal sector workers is used to estimate the participation function. A majority of Tanzanian formal sector workers participate in informal production. Participation in informal production is inversely related to household income, to living in Dar es Salaam, and to being a mother with small children. Participation is positively related to age, and multiple-job-holding seems to play a very different role in the transition from work to retirement in Tanzania compared to industrialized countries.

Suggested Citation

  • Theis Theisen, 2005. "Tanzanian formal sector workers' participation in informal production," Applied Economics, Taylor & Francis Journals, vol. 37(21), pages 2469-2485.
    • Handle: RePEc:taf:applec:v:37:y:2005:i:21:p:2469-2485
    DOI: 10.1080/00036840500366197
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    Cited by:

    1. Joonmo Cho & Donghun Cho, 2011. "Gender difference of the informal sector wage gap: a longitudinal analysis for the Korean labor market," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 16(4), pages 612-629.

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