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

Author

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  • Rajaona, Ambinistoa
  • Limbe, Medad
  • Ali, Mustaf

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.

Suggested Citation

  • Rajaona, Ambinistoa & Limbe, Medad & Ali, Mustaf, 2024. "Exploring the Relationship between Formal Employment and Household Welfare: Evidence from Rural Tanzania," MPRA Paper 122180, University Library of Munich, Germany, revised 01 Nov 2024.
    • Handle: RePEc:pra:mprapa:122180
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    References listed on IDEAS

    as
    1. Stifel, David, 2010. "The rural non-farm economy, livelihood strategies and household welfare," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 4(01), pages 1-28, March.
    2. Aggarwal, Shilpa, 2018. "Do rural roads create pathways out of poverty? Evidence from India," Journal of Development Economics, Elsevier, vol. 133(C), pages 375-395.
    3. Moussa P. Blimpo & Robin Harding & Leonard Wantchekon, 2013. "Public Investment in Rural Infrastructure: Some Political Economy Considerations," Journal of African Economies, Centre for the Study of African Economies, vol. 22(suppl_2), pages -83, August.
    4. Stifel, David, 2010. "The rural non-farm economy, livelihood strategies and household welfare," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 4(1), March.
    5. Ma, Wanglin & Vatsa, Puneet & Zheng, Hongyun & Rahut, Dil Bahadur, 2022. "Nonfarm employment and consumption diversification in rural China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 582-598.
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    Keywords

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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