Publication: Spatial and Sectoral Heterogeneity of Occupational Choice in Cameroon
Loading...
Date
2018-07
ISSN
Published
2018-07
Author(s)
Editor(s)
Abstract
This paper investigates the relationship between location, agglomeration, access to credit, informality, and productivity across cities and industries in Cameroon. Emphasizing the link between micro-foundations and the data, the paper develops and estimates a structural model of occupational choice in which heterogeneous agents choose between formal entrepreneurship, informal entrepreneurship, and non-entrepreneurial work. Their decision-making process is driven by institutional constraints such as entry costs, tax enforcement, and access to credit. The model predicts that agglomeration has a non-monotonic effect on formalization, and entrepreneurial profits increase with agglomeration effects. Estimating the model by the generalized method of moments, the paper finds that the returns to capital and labor are not uniform across sectors and cities. Manufacturing industries are highly constrained in capital and the elasticity of capital is higher in Yaoundé and Douala, whereas labor elasticity is higher in Kribi. Counterfactual simulations show that an increase in roads provision can have a substantial impact in terms of output, formalization, and productivity. A reduction in the current interest rate has a large and significant impact on formalization and no significant effect on business creation. Likewise, while the current tax rate is suboptimal for most cities, a tax reduction policy would have a much greater impact on formalization than on business creation. These effects differ substantially across cities and sectors, suggesting that those policy instruments could be implemented accordingly to support formalization and business creation.
Link to Data Set
Citation
“Bougna, Theophile; Nguimkeu, Pierre. 2018. Spatial and Sectoral Heterogeneity of Occupational Choice in Cameroon. Policy Research Working Paper;No. 8515. © World Bank. http://hdl.handle.net/10986/29988 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Publication The Macroeconomic Implications of Climate Change Impacts and Adaptation Options(Washington, DC: World Bank, 2025-05-29)Estimating the macroeconomic implications of climate change impacts and adaptation options is a topic of intense research. This paper presents a framework in the World Bank's macrostructural model to assess climate-related damages. This approach has been used in many Country Climate and Development Reports, a World Bank diagnostic that identifies priorities to ensure continued development in spite of climate change and climate policy objectives. The methodology captures a set of impact channels through which climate change affects the economy by (1) connecting a set of biophysical models to the macroeconomic model and (2) exploring a set of development and climate scenarios. The paper summarizes the results for five countries, highlighting the sources and magnitudes of their vulnerability --- with estimated gross domestic product losses in 2050 exceeding 10 percent of gross domestic product in some countries and scenarios, although only a small set of impact channels is included. The paper also presents estimates of the macroeconomic gains from sector-level adaptation interventions, considering their upfront costs and avoided climate impacts and finding significant net gross domestic product gains from adaptation opportunities identified in the Country Climate and Development Reports. Finally, the paper discusses the limits of current modeling approaches, and their complementarity with empirical approaches based on historical data series. The integrated modeling approach proposed in this paper can inform policymakers as they make proactive decisions on climate change adaptation and resilience.Publication Global Poverty Revisited Using 2021 PPPs and New Data on Consumption(Washington, DC: World Bank, 2025-06-05)Recent improvements in survey methodologies have increased measured consumption in many low- and lower-middle-income countries that now collect a more comprehensive measure of household consumption. Faced with such methodological changes, countries have frequently revised upward their national poverty lines to make them appropriate for the new measures of consumption. This in turn affects the World Bank’s global poverty lines when they are periodically revised. The international poverty line, which is based on the typical poverty line in low-income countries, increases by around 40 percent to $3.00 when the more recent national poverty lines as well as the 2021 purchasing power parities are incorporated. The net impact of the changes in international prices, the poverty line, and new survey data (including new data for India) is an increase in global extreme poverty by some 125 million people in 2022, and a significant shift of poverty away from South Asia and toward Sub-Saharan Africa. The changes at higher poverty lines, which are more relevant to middle-income countries, are mixed.Publication Geopolitical Fragmentation and Friendshoring(Washington, DC: World Bank, 2025-06-26)This paper examines the relationship between geopolitical fragmentation and friendshoring of foreign investments over time, countries, and sectors. The analysis uses comprehensive data on foreign direct investments covering greenfield projects, mergers and acquisitions, and stocks of affiliates, as well as data on four alternative measures of geopolitical distance between countries. The gravity estimations suggest that, first, geopolitical differences have a negative effect on foreign investments and the magnitude has heightened in the post-pandemic period compared to a decade ago. Second, it is primarily the companies from advanced Western economies whose foreign investment decisions are increasingly shaped by friendshoring forces. Finally, the paper shows that friendshoring is not only confined to strategic industries, implying that allocations of foreign direct investments may not solely reflect national security or resilience considerations.Publication Soaring Food Prices Threaten Recent Economic Gains in the EU(Washington, DC: World Bank, 2025-07-02)The surge in food prices following the 2021 economic rebound has become a significant concern for households, particularly low-income ones, in Bulgaria, Croatia, Poland, and Romania. Food price inflation, which surpasses general inflation rates, risks worsening poverty and food insecurity in these countries. This paper explores the distributional impacts of rising food prices and the effectiveness of government response measures. Low-income households, who allocate a larger share of their income to food, are disproportionately affected and are struggling to cope with unexpected expenses, leading to increased difficulties in accessing proper nutrition. Simulations indicate that rising food prices contribute to higher poverty rates and greater income inequality, especially among vulnerable populations. They also suggest that the main poverty-targeted social assistance schemes offer critical support for the extreme poor, but expanding both coverage and benefits is vital to shield all at-risk individuals. Targeted policies that balance immediate relief with long-term resilience-building are essential to addressing the challenges posed by escalating food prices.Publication Disentangling the Key Economic Channels through Which Infrastructure Affects Jobs(Washington, DC: World Bank, 2025-04-03)This paper takes stock of the literature on infrastructure and jobs published since the early 2000s, using a conceptual framework to identify the key channels through which different types of infrastructure impact jobs. Where relevant, it highlights the different approaches and findings in the cases of energy, digital, and transport infrastructure. Overall, the literature review provides strong evidence of infrastructure’s positive impact on employment, particularly for women. In the case of electricity, this impact arises from freeing time that would otherwise be spent on household tasks. Similarly, digital infrastructure, particularly mobile phone coverage, has demonstrated positive labor market effects, often driven by private sector investments rather than large public expenditures, which are typically required for other large-scale infrastructure projects. The evidence on structural transformation is also positive, with some notable exceptions, such as studies that find no significant impact on structural transformation in rural India in the cases of electricity and roads. Even with better market connections, remote areas may continue to lack economic opportunities, due to the absence of agglomeration economies and complementary inputs such as human capital. Accordingly, reducing transport costs alone may not be sufficient to drive economic transformation in rural areas. The spatial dimension of transformation is particularly relevant for transport, both internationally—by enhancing trade integration—and within countries, where economic development tends to drive firms and jobs toward urban centers, benefitting from economies scale and network effects. Turning to organizational transformation, evidence on skill bias in developing countries is more mixed than in developed countries and may vary considerably by context. Further research, especially on the possible reasons explaining the differences between developed and developing economies, is needed.
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Strengthening Economic Rights and Women's Occupational Choice : The Impact of Reforming Ethiopia's Family Law(World Bank, Washington, DC, 2013-11)This paper evaluates the impact of strengthening legal rights on the types of economic opportunities that are pursued. Ethiopia changed its family law, requiring both spouses' consent in the administration of marital property, removing the ability of a spouse to deny permission for the other to work outside the home, and raising women's minimum age of marriage. Thus both access to resources and the removal of restrictions on employment served to strengthen women's bargaining position within the household and their ability to pursue economic opportunities. Although this reform now applies nationally, it was initially rolled out in the two chartered cities and three of Ethiopia's nine regions. Using nationally representative household surveys from just prior to the reform and five years later allows for a difference-in-difference estimation of the reform's impact. The analysis finds that women were relatively more likely to work in occupations that require work outside the home, employ more educated workers, and in paid and full-time jobs where the reform had been enacted, controlling for time and location effects. As the relative increase in women's participation in these activities was 15-24 percent higher in areas where the reform was carried out, the magnitude of the impact is significant too.Publication Evaluation of Financial Liberalization : A General Equilibrium Model with Constrained Occupation Choice(World Bank, Washington, DC, 2003-04)The objective of this paper is to assess both the aggregate growth effects and the distributional consequences of financial liberalization as observed in Thailand from 1976 to 1996. A general equilibrium occupational choice model with two sectors, one without intermediation, and the other with borrowing and lending, is taken to Thai data. Key parameters of the production technology and the distribution of entrepreneurial talent are estimated by maximizing the likelihood of transition into business given initial wealth as observed in two distinct datasets. Other parameters of the model are calibrated to try to match the two decades of growth as well as observed changes in inequality, labor share, savings, and the number of entrepreneurs. Without an expansion in the size of the intermediated sector, Thailand would have evolved very differently, namely, with a drastically lower growth rate, high residual subsistence sector, non-increasing wages, but lower inequality. The financial liberalization brings welfare gains and losses to different subsets of the population. Primary winners are talented would-be entrepreneurs who lack credit and cannot otherwise go into business (or invest little capital). Mean gains for these winners range from 17 to 34 percent of observed overall average household income. But liberalization also induces greater demand by entrepreneurs for workers resulting in increases in the wage and lower profits of relatively rich entrepreneurs of the same order of magnitude as the observed overall average income of firm owners. Foreign capital has no significant impact on growth or the distribution of observed income.Publication What Makes Cities More Competitive? Spatial Determinants of Entrepreneurship in India(World Bank, Washington, DC, 2012-09)Policy makers in both developed and developing countries want to make cities more competitive, attract entreprepreneurs, boost economic growth, and promote job creation. The authors examine the spatial location of entrepreneurs in India in manufacturing and services sectors, as well as in the formal and informal sectors, in 630 districts spread across 35 states/union territories. They quantify entrepreneurship as young firms that are less than three years old, and define entry measures through employment in these new establishments. They develop metrics that unite the incumbent industrial structures of districts with the extent to which industries interact through the traditional agglomeration channels. The two most consistent factors that predict overall entrepreneurship for a district are its education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. These relationships are much stronger in India than those found for the United States. The authors also find strong evidence of agglomeration economies in India's manufacturing sector. This influence is through both traditional Marshallian economies like a suitable labor force and proximity to customers and through the Chinitz effect that emphasizes small suppliers. India's footprints in structural transformation, urbanization, and manufacturing sector are still at an early stage. At such an early point and with industrial structures not yet entrenched, local policies and traits can have profound and lasting impacts by shaping where industries plant their roots.Publication Access to Finance, Product Innovation and Middle-Income Traps(World Bank, Washington, DC, 2014-02)This paper studies interactions between access to finance, product innovation, and labor supply in a two-period overlapping generations model with an endogenous skill distribution and credit market frictions. In the model lack of access to finance (induced by high monitoring costs) has an adverse effect on innovation activity not only directly but also indirectly, because too few individuals may choose to invest in skills. If monitoring costs fall with the number of successful projects, multiple equilibria may emerge, one of which, a middle-income trap, characterized by low wages in the design sector, a low share of the labor force engaged in innovation activity, and low growth. A sufficiently ambitious policy aimed at alleviating constraints on access to finance by innovators may allow a country to move away from such a trap by promoting the production of ideas and improving incentives to invest in skills.Publication The Household Enterprise Sector in Tanzania : Why It Matters and Who Cares(2011-11-01)The household enterprise sector has a significant role in the Tanzanian economy. It employs a larger share of the urban labor force than wage employment, and is increasingly seen as an alternative to agriculture as a source of additional income for rural and urban households. The sector is uniquely placed within the informal sector, where it represents both conditions of informal employment and informal enterprise. This paper presents a case study on Tanzania using a mixed approach by combining both quantitative and qualitative analysis to examine the important role of household enterprises in the labor force of Tanzania, and to identify key factors that influence their productivity. Household enterprise owners are similar to typical labor force participants although primary education appears to be the minimum qualification for household enterprise operators to be successful. Access to location matters -- good, secure location in a marketplace or industrial cluster raises earnings - and access to transport and electricity is found to have a significant effect on earnings as well. In large urban areas, the biggest constraint faced by household enterprises is the lack of access to secure workspace to run the small business. Although lack of credit is a problem across all enterprises in Tanzania, household enterprises are more vulnerable because they are largely left out of the financial sector either as savers or borrowers. Although HEs are part of the livelihood strategies of over half of households in Tanzania, they are ignored in the current development policy frameworks, which emphasize formalization, not productivity. Tanzania has a large number of programs and projects for informal enterprises, but there is no set of policies and program interventions targeted at the household enterprise sector. This gap exacerbates the vulnerability of household enterprises, and reduces their productivity.
Users also downloaded
Showing related downloaded files
Publication Ten Steps to a Results-Based Monitoring and Evaluation System : A Handbook for Development Practitioners(Washington, DC: World Bank, 2004)An effective state is essential to achieving socio-economic and sustainable development. With the advent of globalization, there are growing pressures on governments and organizations around the world to be more responsive to the demands of internal and external stakeholders for good governance, accountability and transparency, greater development effectiveness, and delivery of tangible results. Governments, parliaments, citizens, the private sector, Non-governmental Organizations (NGOs), civil society, international organizations, and donors are among the stakeholders interested in better performance. As demands for greater accountability and real results have increased, there is an attendant need for enhanced results-based monitoring and evaluation of policies, programs, and projects. This handbook provides a comprehensive ten-step model that will help guide development practitioners through the process of designing and building a results-based monitoring and evaluation system. These steps begin with a 'readiness assessment' and take the practitioner through the design, management, and importantly, the sustainability of such systems. The handbook describes each step in detail, the tasks needed to complete each one, and the tools available to help along the way.Publication Zimbabwe(World Bank, Washington, DC, 2019-03-01)This report presents an assessment of Zimbabwe’s agriculture sector disaster risk and management capacity. The findings indicate that Zimbabwe is highly exposed to agricultural risks and has limited capacity to manage risk at various levels. The report shows that disaster-related shocks along Zimbabwe’s agricultural supply chains directly translate to volatility in agricultural GDP. Such shocks have a substantial impact on economic growth, food security, and fiscal balance. When catastrophic disasters occur, the economy absorbs the shocks, without benefiting from any instruments that transfer the risk to markets and coping ability. The increasing prevalence of ‘shock recovery-shock’ cycles impairs Zimbabwe’s ability to plan and pursue a sustainable development path. The findings presented here confirm that it is highly pertinent for Zimbabwe to strengthen the capacity to manage risk at various levels, from the smallholder farmer, to other participants along the supply chain, to consumers (who require a reliable, safe food supply), and ultimately to the government to manage natural disasters. The assessment provides the following evidence on sources of risks and plausible risk management solutions. It is our hope that the report contributes to action by the Government of Zimbabwe to adopt a proactive and integrated risk management strategy appropriate to the current structure of the agricultural sector.Publication Supporting Youth at Risk(World Bank, Washington, DC, 2008)The World Bank has produced this policy Toolkit in response to a growing demand from our government clients and partners for advice on how to create and implement effective policies for at-risk youth. The author has highlighted 22 policies (six core policies, nine promising policies, and seven general policies) that have been effective in addressing the following five key risk areas for young people around the world: (i) youth unemployment, underemployment, and lack of formal sector employment; (ii) early school leaving; (iii) risky sexual behavior leading to early childbearing and HIV/AIDS; (iv) crime and violence; and (v) substance abuse. The objective of this Toolkit is to serve as a practical guide for policy makers in middle-income countries as well as professionals working within the area of youth development on how to develop and implement an effective policy portfolio to foster healthy and positive youth development.Publication World Development Report 2019(Washington, DC: World Bank, 2019)Work is constantly reshaped by technological progress. New ways of production are adopted, markets expand, and societies evolve. But some changes provoke more attention than others, in part due to the vast uncertainty involved in making predictions about the future. The 2019 World Development Report will study how the nature of work is changing as a result of advances in technology today. Technological progress disrupts existing systems. A new social contract is needed to smooth the transition and guard against rising inequality. Significant investments in human capital throughout a person’s lifecycle are vital to this effort. If workers are to stay competitive against machines they need to train or retool existing skills. A social protection system that includes a minimum basic level of protection for workers and citizens can complement new forms of employment. Improved private sector policies to encourage startup activity and competition can help countries compete in the digital age. Governments also need to ensure that firms pay their fair share of taxes, in part to fund this new social contract. The 2019 World Development Report presents an analysis of these issues based upon the available evidence.Publication The Power of Survey Design : A User's Guide for Managing Surveys, Interpreting Results, and Influencing Respondents(Washington, DC: World Bank, 2006)The vast majority of data used for economic research, analysis, and policy design comes from surveys-surveys of households, firms, schools, hospitals, and market participants, and, the accuracy of the estimate will depend on how well the survey is done. This innovative book is both a 'how-to' go about carrying out high-quality surveys, especially in the challenging environment of developing countries, and a 'user's guide' for anyone who uses statistical data. Reading this book will provide data users with a wealth of insight into what kinds of problems, or biases to look for in different data sources, based on the underlying survey approaches that were used to generate the data. In that sense the book is an invaluable 'skeptics guide to data'. Yet, the broad storyline of the book is something that should be absorbed by statistical data users. The book will teach and show how difficult it often is to obtain reliable estimates of important social and economic facts, and, therefore encourages you to approach all estimates with sensible caution.