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Title:Is the Informal Sector Constrained from the Demand Side? Evidence for Six West African Capitals PDF Logo
Authors:Thiele, Rainer
Böhme, Marcus
Issue Date:2011
Series/Report no.:Proceedings of the German Development Economics Conference, Berlin 2011 76
Abstract:Employing a unique dataset that covers households from six West African capitals, this paper provides new evidence on the demand for informal sector products and services. We first investigate whether demand linkages exist between formal and informal products and distribution channels, and whether there is an overlapping customer base, which would imply that both formal sector wage earners and informal workers buy both formal and informal products using both formal and informal distribution channels. In a second step, we estimate demand elasticities based on Engel curves. We find a strongly overlapping customer base and strong demand-side linkages between the formal and informal sector, with the exception that informal goods are hardly bought through formal distribution channels. The estimated demand elasticities tend to show that rising incomes are associated with a lower propensity to consume informal sector goods and to use informal distribution channels. We therefore conclude that the informal sector in West Africa is likely to be constrained from the demand side.
Subjects:Informal sector
formal-informal linkages
Engel curve estimates
West Africa
JEL:D12
O17
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2011 (Berlin)
Publikationen von Forscherinnen und Forschern des IfW

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