Bonn : IZA, 2008, 35 p. (Discussion Paper Series – IZA ; 3558)
With the use of comparable data from seven West African capitals, we attempt to assess the rationale behind development policies targeting high rates of school enrolment through the prism of allocation of labour and returns to skills across the formal and informal sectors. We find that people with high levels of education allocate to the small formal sector and receive high compensation for their education and experience. Less educated workers allocate to the informal sector. While self-employment reveals some characteristics of a sector of dynamic entrepreneurship, the characteristics of the informal salaried sector are closer to those of a sector of hidden unemployment, or a stepping stone for better jobs in the future.
JEL Classification: J24, J31, O12
Keywords: returns to skills, allocation of labour, self-selection, informal sector, Sub-Saharan West Africa