A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market

Andrew Kerr

No 2012-21, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: In this paper I build an equilibrium search model of the urban Tanzanian labour market that explains the choice between wage and self-employment and the variation in earnings across and within these sectors. Self-employment is very common in urban Tanzania and survey data show both that there are large overlaps in the distribution of earnings in private wage employment and self-employment and that there is little movement between wage and self-employment. This suggests that self-employment represents a worthwhile alternative to wage employment in small, low-productivity firms for the majority of urban Tanzanians, in contrast to the traditional view of African labour markets in which wage employment in small firms and self-employment are lumped together as the informal sector.

Date: 2012
New Economics Papers: this item is included in nep-afr, nep-dev, nep-dge, nep-iue and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:csa:wpaper:2012-21

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