Exploring the Relationship between Formal Employment and Household Welfare: Evidence from Rural Tanzania

Rajaona, Ambinistoa and Limbe, Medad and Ali, Mustaf (2024): Exploring the Relationship between Formal Employment and Household Welfare: Evidence from Rural Tanzania.

Abstract

This study investigates the impact of formal employment on household welfare in rural Tanzania using data from the 2012/13 Tanzania National Panel. Distance to major roads is employed as an instrumental variable to estimate the local area treatment effect (LATE) of formal employment participation on household consumption levels. Results from the first stage show that as distance from major roads increases the likelihood of participating in formal employment also declines. The second stage results reveal that households that are engaged in formal employment have significantly higher consumption levels compared to households to non-participating households. The findings highlight the crucial role that improving road infrastructure can play in promoting access to formal employment opportunities and improving living standards in rural areas.

• Item Type: MPRA Paper
• Language: English
• Keywords: employment; welfare; infrastructure; tanzania; instrumental variables; LATE
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics; D - Microeconomics > D6 - Welfare Economics; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty; I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs

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