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Revisiting the determinants of informal sector in Burkina Faso

Traoré, Jean Abel (2012): Revisiting the determinants of informal sector in Burkina Faso.

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Abstract

The main objective of this paper is to highlight the determinants of informal sector activity with a special focus on informal self-employment opposed to informal wage employment. For this purpose we build a theoretical framework to show the important role of education in occupational choice. To empirically test our hypothesis, we estimate a two-stage degenerated nested Logit model after rejecting the IIA hypothesis. Our results show that the probability of formal sector employment increases with the level of education. In the informal sector education attainment tends to reduce the probability of self-employment as opposed to wage employment. Other relevant determinants are related to gender, age and place of residence.

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