Earning structure and heterogeneity of the labor market: Evidence from DR Congo

Douglas Amuli Ibale ()
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Douglas Amuli Ibale: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)

No 2020037, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: Using a unique broad individual, household and expenditure survey data on the DRC, initial descriptive statistics highlight five different sectors on the labor market with two "higher-paid" that are completely formal and two "lower-paid" that are largely informal. Based on a linear regression result, we report a significant heterogeneity across them when it comes to earnings. With an unconditional quantile regression methodology corrected for selectivity bias we show that, though the effect of education on earnings provides a clear support to the human capital theory, basic education has no significant impact on earnings in higher-paid sectors. Likewise, tertiary education matters for earnings in lower-paid sectors as well. We then decompose the earning gap across sectors and show that workers of the lower-paid sectors earn less not only because they are less skill endowed but also because they earn lower returns on such skills. However, when higher-paid and lower paid sectors are concerned, the coefficient effect at the upper end of the distribution is negative. Implying that the labor market provides an "informal employment earning premium" to some workers of the lower-paid sectors whose, given their characteristics, wouldn't do better in the higher-paid sectors.

Keywords: Earning; Labor market; Heterogeneity; Earning decomposition (search for similar items in EconPapers)
JEL-codes: E26 J21 J31 J4 J7 J82 (search for similar items in EconPapers)
Date: 2020-12-28
New Economics Papers: this item is included in nep-dev and nep-lma
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