Informal Sector Heterogeneity and Income Inequality : Evidence from the Democratic Republic of Congo
This paper uses 1-2-3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector. The first group of entrepreneurs—top performers -- is growt...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/984711517510605615/Informal-sector-heterogeneity-and-income-inequality-evidence-from-the-Democratic-Republic-of-Congo http://hdl.handle.net/10986/29316 |
| Summary: | This paper uses 1-2-3 survey data on the
Democratic Republic of Congo to analyze heterogeneity in the
informal sector. It empirically identifies three types of
entrepreneurs in the sector. The first group of
entrepreneurs—top performers -- is growth oriented and
enjoys greater access to capital. The second
group—constrained gazelles -- includes entrepreneurs who
share many characteristics, especially management skills,
with the top performers, but operate with less capital. The
third group—survivalists—comprises firms struggling to grow.
Based on logit and fixed effect ordinary least squares
models, the results presented in this paper show that
poverty and income inequality are more common among
constrained gazelles and survivalists. The paper also shows
that income inequality is explained mainly by educational
disparities and lack of credit access among entrepreneurs.
Additionally, the outcomes of a Blinder-Oaxaca decomposition
show that the performance of firms is a key factor in
explaining differences in income. Examining the drivers of
performance, the paper finds that human capital and
managerial skills are important engines of performance. |
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