Gender, Regulation Efficiency and Informal Employment in Sub-Saharan Africa

Abstract

Regulation efficiency is essential in addressing the growing informal sector in developing countries because informality thrives with an inefficient legal and regulatory framework of an economy. This paper, therefore, seeks to explore the effect of regulations on informal employment across a panel of 36 sub-Saharan Africa from 2005 to 2018. The study includes both the business and labour aspects of regulation to analyse the effect. The fixed effect and GMM method of panel regression analysis was adopted to achieve the objective of the study. The result suggests that an increase in labour regulation efficiency is associated with a reduction in informal employment while there exists no significant relationship between efficient business regulation and informal employment. The study further investigates how the outcomes affect both genders and the output. The study suggests that efficient labour regulation is gender-specific, as the result is only consistent for the male. It is therefore imperative to incorporate more female gender-specific incentives in the social and labour regulations to compensate for the imbalance of social roles of women that may affect their choice to work in the formal or informal sector.

Employment policy in Mainland Tanzania: what's in it for women?

“…For instance, while minimum wage and employment protection legislation can have an important equalizing effect among formal sector employees, evidence from developing countries shows that the most disadvantaged population groups (such as women, youth, and the low-skilled workforce) typically work in the informal sector, where they remain largely uncovered (Betcherman 2015). Yet effective labour regulations may attract informal workers to shift into formal employment (Flavin et al 2019), and the effect of preventing an increase in informal working arrangements has been identified in Sub-Saharan Africa (Akande et al 2021). At the same time, governments can implement informal sector-specific regulations which improve the general working conditions of informal workers, through the legalization of activities or residences, for instance (Razavi and Staab 2018).…”