The Choice of the Working Secto in Transition: Income and non‐income determinants of sector participation in Kazakhstan

Paolo Verme

The Economics of Transition, 2000, vol. 8, issue 3, 691-731

Abstract: This study compares the individual, household and location characteristics of private employees, the self‐employed, the unemployed and the economically inactive in Kazakhstan making use of a 1996 World Bank Living Standards Measurement Survey. The purpose is to understand whether the process of transition has determined a selection of workers exiting the state sector and entering the three relatively new ‘pools’ of private employees, self‐employed and unemployed. An ‘occupational choice’ model is used to explore the determinants of sector participation. It is found that income opportunities are similar between the private and self‐employment sectors, that the private sector is not necessarily the workers' first choice and that non‐income determinants including local economic and labour market conditions and household related factors explain better than income the choice of the working sector. Self‐employment seems to be a key sector in understanding the mechanisms of sector choice and the reallocation of labour. Unemployment appears as a choice of last resort and made by truly ‘rationed’ individuals.

Date: 2000
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