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Working Paper

Intergenerational Transmission of Self-Employed Status in the Informal Sector : A Constrained Choice or Better Income Prospects? Evidence from Seven West-African Countries

ACCESS TO CAPITAL ACCESS TO CREDIT ACCESS TO FINANCE ACCESS TO FORMAL CREDIT ACCOUNTS ACCUMULATION RATE ADVANCED ECONOMY AGRICULTURAL ECONOMICS BANK CREDIT BANK POLICY BARRIERS TO ENTRY BIASES BORROWING BUSINESS ACTIVITY BUSINESS ASSOCIATIONS BUSINESS ECONOMICS BUSINESS OWNERS BUSINESS RISK CAPACITY BUILDING CAPITAL ACCUMULATION CAPITAL CONSTRAINT CAPITAL COST CAPITAL INJECTION CAPITAL MARKET CAPITAL REQUIREMENTS CAPITAL RETURNS CAPITAL SHORTAGES CAPITAL STOCK CHECKS COLLATERAL CONTRACTUAL OBLIGATIONS COST OF CAPITAL CREDIT CONSTRAINED FIRMS CREDIT CONSTRAINT CREDIT HISTORY CREDIT INSTITUTIONS CREDIT MARKET CREDIT RATIONING DEGREES OF RISK DEMOGRAPHIC CHARACTERISTICS DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DIVERSIFICATION DUMMY VARIABLE DURABLE DURABLE GOODS EARNINGS ECONOMETRIC MODELS ECONOMIC CONSTRAINTS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES ECONOMIC STATISTICS ENDOWMENTS ENTERPRISE PERFORMANCE ENTREPRENEUR ENTREPRENEURIAL ACTIVITY ENTREPRENEURS ENTRY BARRIERS EQUIPMENT EXCESSIVE RISK EXPECTED UTILITY EXPECTED VALUE EXPENDITURE EXTERNAL FINANCE FAMILY FINANCE FAMILY LOANS FARMERS FEMALE ENTREPRENEURS FINANCIAL MEANS FINANCIAL RESOURCES FINANCIAL SUPPORT FIXED COSTS FORMAL BANKS GDP GROUP OF FIRMS GROWTH THEORY HIGH INTEREST RATES HOLDING HOUSEHOLD WEALTH HOUSEHOLDS HUMAN CAPITAL INCOME GROWTH INFORMATION ASYMMETRIES INFORMATION ON ENTREPRENEURS INFORMATION ON INVESTMENT INSTRUMENT INSURANCE INSURANCE MARKET INSURANCE PRODUCTS INTEREST RATE INTERNAL FINANCE INTERNAL FUNDS INVENTORY INVESTING INVESTMENT BEHAVIOR JOB CREATION LABOR FORCE SURVEY LABOR MARKET LACK OF ACCESS LEVEL OF RISK LIQUID WEALTH LIQUIDITY LIQUIDITY CONSTRAINT LIQUIDITY PREMIUM LIQUIDITY PROBLEMS LOAN LOTTERY MARGINAL COST MARGINAL PRODUCT MARGINAL UTILITY MARGINAL UTILITY OF CONSUMPTION MARKET CONSTRAINTS MARKET ECONOMY MARKET FAILURE MARKET INTEREST RATE MICRO DATA MICRO ENTERPRISES MICRO-CREDIT MICRO-ENTERPRISE MICRO-FINANCE MICRO-FINANCE INSTITUTIONS MICROCREDIT MICROENTERPRISES MIDDLE INCOME COUNTRIES MONEY LENDERS MONEYLENDERS MORAL HAZARD OPPORTUNITY COST PHYSICAL CAPITAL POLITICAL ECONOMY PORTFOLIO PRICE RISK PRICE UNCERTAINTY PRODUCTION FUNCTION PRODUCTIVE INVESTMENT PROFITABILITY PURCHASING POWER PURCHASING POWER PARITY RATE OF RETURN RECEIPTS REINVESTMENT RETAINED EARNINGS RISK AVERSION RISK PERCEPTIONS RISK PREMIUM RISK-AVERSE INDIVIDUALS SAFE ASSET SAVINGS SELF-EMPLOYMENT SMALL BUSINESS SMALL ENTERPRISES SMALL-SCALE ENTREPRENEURS SOURCE OF CREDIT SOURCES OF FINANCE START-UP TAX TAXIS TRADE SECTOR TRADING TRANSITION COUNTRY TRANSITION ECONOMY TRUST FUND UNION VALUE ADDED WEALTH
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World Bank, Washington, DC
Africa | West Africa
2017-06-21T21:05:57Z | 2017-06-21T21:05:57Z | 2011-04

Social reproduction is the highest for self-employed as shown by an extensive literature from developed and developing countries. Very few studies however document the reason for this high intergenerational correlation of the self-employed status. The purpose of this paper is to test if the second-generation of self-employed has an advantage related to the first-generation in the African context. It aims at highlighting the debate on firms heterogeneity in the informal sector, by identifying factors of informal business success. In addition, this paper seeks to contribute to understand the intergenerational transmission of inequalities. Using 1-2-3 surveys collected in the commercial capitals of seven West African countries in 2001-2002, this paper shows that the second-generation of informal self-employed does not have better outcomes than the first one, except when they choose a familial tradition in the same sector of activity. Thus, in the African context, having a self-employed father does not provide any advantage in terms of profit or sales and is not sufficient for the transmission of valuable skills. On the other hand, informal entrepreneurs who have chosen a specific enterprise based on familial tradition have a competitive advantage. Their competitive advantage is partly explained by the transmission of enterprise-specific human capital, acquired through experiences in the same type of activity and by the transmission of social capital that guarantees a better clientele and a reputation.

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