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Allocation of Labor in Urban West Africa: Insights from the Pattern of Labor Supply and Skill Premiums

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  • Ralitza Dimova
  • Christophe J. Nordman
  • François Roubaud

Abstract

Using comparable data from five West African capitals, we assess the rationale behind development policies targeting high rates of school enrollment through the prism of allocation of labor and earnings effects of skills across the formal and informal sectors, and not working. We find that people with high levels of education allocate to the small formal sector, while less educated workers allocate to the informal sector. While high levels of education are given more value in the relatively smaller sectors of salaried employment, observed skills like education appear to be fairly unprofitable in the larger self-employment sector. The fact that only the small formal sector in urban West Africa both seems to absorb highly educated workers and provide high skill premiums may be an important reason for the observed low demand for education and high dropout rates. Copyright © 2010 Blackwell Publishing Ltd.

Suggested Citation

  • Ralitza Dimova & Christophe J. Nordman & François Roubaud, 2010. "Allocation of Labor in Urban West Africa: Insights from the Pattern of Labor Supply and Skill Premiums," Review of Development Economics, Wiley Blackwell, vol. 14(1), pages 74-92, February.
  • Handle: RePEc:bla:rdevec:v:14:y:2010:i:1:p:74-92
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    References listed on IDEAS

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    1. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
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    8. Kuepie, Mathias & Nordman, Christophe J. & Roubaud, François, 2009. "Education and earnings in urban West Africa," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 491-515, September.
    9. Appleton, Simon & Hoddinott, John & Krishnan, Pramila, 1999. "The Gender Wage Gap in Three African Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 289-312, January.
    10. François Bourguignon & Martin Fournier & Marc Gurgand, 2007. "Selection Bias Corrections Based On The Multinomial Logit Model: Monte Carlo Comparisons," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 174-205, February.
    11. Mazumdar, Dipak, 1983. "Segmented Labor Markets in LDCs," American Economic Review, American Economic Association, vol. 73(2), pages 254-259, May.
    12. Alan de Brauw & Scott Rozelle, 2008. "Reconciling the Returns to Education in Off-Farm Wage Employment in Rural China," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 57-71, February.
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    Cited by:

    1. Dimova, Ralitza & Gbakou, Monnet, 2013. "The Global Food Crisis: Disaster, Opportunity or Non-event? Household Level Evidence from Côte d’Ivoire," World Development, Elsevier, vol. 46(C), pages 185-196.
    2. Jean-Pierre Cling & Mireille Razafindrakoto & François Roubaud, 2017. "Segmentation and informality in Vietnam: A survey of the literature," CEPN Working Papers hal-01653653, HAL.
    3. Mathias Kuepié & Christophe J. Nordman, 2016. "Where Does Education Pay Off in Sub-Saharan Africa? Evidence from Two Cities of the Republic of Congo," Oxford Development Studies, Taylor & Francis Journals, vol. 44(1), pages 1-27, January.
    4. Bocquier, Philippe & Nordman, Christophe J. & Vescovo, Aude, 2010. "Employment Vulnerability and Earnings in Urban West Africa," World Development, Elsevier, vol. 38(9), pages 1297-1314, September.
    5. repec:dau:papers:123456789/7386 is not listed on IDEAS
    6. Julia Vaillant & Michael Grimm & Jann Lay & François Roubaud, 2014. "Informal sector dynamics in times of fragile growth: The case of Madagascar," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), pages 437-455.
    7. repec:dau:papers:123456789/4294 is not listed on IDEAS
    8. Jean-Pierre Cling & Mireille Razafindrakoto & François Roubaud, 2014. "Segmentation and informality in Vietnam: A Survey of Literature," Working Papers DT/2014/14, DIAL (Développement, Institutions et Mondialisation).
    9. Radchenko, Natalia, 2014. "Heterogeneity in Informal Salaried Employment: Evidence from the Egyptian Labor Market Survey," World Development, Elsevier, vol. 62(C), pages 169-188.
    10. Ralitza Dimova & Monnet Gbakou, 2012. "A right price for rice? Côte d’Ivoire insights into the welfare implications of the ‘global food crisis’," Brooks World Poverty Institute Working Paper Series 17212, BWPI, The University of Manchester.
    11. repec:dau:papers:123456789/14332 is not listed on IDEAS

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