Publication: Self-Employment in the Developing World
Date
2012-09
ISSN
Published
2012-09
Author(s)
Abstract
This paper analyzes heterogeneity among
the self-employed in 74 developing countries, representing
two-thirds of the population of the developing world. After
profiling how worker characteristics vary by employment
status, it classifies self-employed workers outside
agriculture as "successful" or
"unsuccessful" entrepreneurs, based on two
measures of success: whether the worker is an employer, and
whether the worker resides in a non-poor household. Four
main findings emerge. First, jobs exhibit a clear pecking
order, with household welfare and worker education highest
for employers, followed by wage and salaried employees,
non-agricultural own-account workers, non-agricultural
unpaid family workers, and finally agricultural workers.
Second, a substantial minority of own-account workers reside
in non-poor households, suggesting that their profits are
often a secondary source of household income. Third, as per
capita income increases, the structure of employment shifts
rapidly, first out of agriculture into unsuccessful
non-agricultural self-employment, and then mainly into
non-agricultural wage employment. Finally, roughly one-third
of the unsuccessful entrepreneurs share similar
characteristics with their successful counterparts,
suggesting they have the potential to be successful but face
constraints to growth. The authors conclude that although
interventions such as access to credit can benefit a
substantial portion of the self-employed, effectively
targeting the minority of self-employed with higher growth
potential is important, particularly in low-income contexts.
The results also highlight the potential benefits of
policies that facilitate shifts in the nature of work, first
from agricultural labor into non-agricultural
self-employment, and then into wage and salaried jobs.
Citation
“Gindling, T. H.; Newhouse, David. 2012. Self-Employment in the Developing World. Policy Research Working Paper; No. 6201. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/5526ae5c-2f22-503e-ad86-f052385486e2 License: CC BY 3.0 IGO.”
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