Informal sector heterogeneity and income inequality: Evidence from the Democratic Republic of Congo
Franck M. Adoho () and
Djeneba Doumbia ()
Additional contact information
Franck M. Adoho: World Bank, USA
No 447, Working Papers from ECINEQ, Society for the Study of Economic Inequality
This paper uses 1-2-3 survey data on the Democratic Republic of Congo to analyze heterogeneity in the informal sector. It empirically identifies three types of entrepreneurs in the sector. The first group of entrepreneurs—top performers—is growth oriented and enjoys greater access to capital. The second group—constrained gazelles—includes entrepreneurs who share many characteristics, especially management skills, with the top performers, but operate with less capital. The third group—survivalists—comprises firms struggling to grow. Based on logit and fixed effect ordinary least squares models, the results show that poverty and income inequality are more common among constrained gazelles and survivalists. The paper also shows that income inequality is explained mainly by educational disparities and lack of credit access among entrepreneurs. Additionally, the outcomes of a Blinder-Oaxaca decomposition show that the performance of firms is a key factor in explaining differences in income. Examining the drivers of performance, the paper finds that human capital and managerial skills are important engines of performance.
Keywords: Informal sector; income inequality; firm performance; Democratic Republic of Congo. (search for similar items in EconPapers)
JEL-codes: D21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm, nep-ent, nep-iue and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Informal sector heterogeneity and income inequality: evidence from the Democratic Republic of Congo (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:inq:inqwps:ecineq2017-447
Access Statistics for this paper
More papers in Working Papers from ECINEQ, Society for the Study of Economic Inequality Contact information at EDIRC.
Bibliographic data for series maintained by Maria Ana Lugo ().