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

Ambinistoa Rajaona, Medad Limbe and Mustaf Ali

MPRA Paper from University Library of Munich, Germany

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.

Keywords: employment; welfare; infrastructure; tanzania; instrumental variables; LATE (search for similar items in EconPapers)
JEL-codes: D1 D6 I3 I38 (search for similar items in EconPapers)
Date: 2024-06-02, Revised 2024-11-01
New Economics Papers: this item is included in nep-agr, nep-iue and nep-tre
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