COMPETITION AND EMPLOYMENT IN THE TELECOMMUNICATIONS INDUSTRY IN TANZANIA

Achilana Mkunga Mtingele

Working Papers from African Economic Research Consortium

Abstract: This dissertation examines the impact of competition on employment in the telecommunications industry in Tanzania. Specifically, it addresses the question "Does competition in telecommunications industry in Tanzania have any significant impact on employment?" Furthermore, the competitive pressure existed in the industry after liberalization in the 1990s is what induced the study. The panel data available for this dissertation over the period of seventeen years, allows estimation of competition and levels of employment that control for firm fixed effects. The model estimated relies on employment equation that uses competition variable measured by Herfindhal-Hirschman Index as one of the regressors. The findings based on OLS estimates indicate that 1 per cent increase in competition increases employment by 1.02 per cent but the coefficient estimate is not significant, partly suggesting biasness of OLS. When firm fixed effects are controlled for, the model demonstrates robust positive correlation between competition and employment; 1 per cent increase in competition increases employment by 0.66 percent; these results are highly significant at 5 per cent. Such results suggest that OLS estimates are indeed biased. The dissertation concludes significant positive correlation between employment and competition hence recommends for more efforts to support employment creating competition.

Date: 2011-09-22
Note: African Economic Research Consortium
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