On the informal sector

Abstract

Defining the informal sector in terms of household enterprises, the study highlights an alternative investigative approach to the study of informal sector. It contends that one way of analysing the informal sector is to closely examine what is happening within households that drive enterprises. Combined with other definitions, this approach would prove superior in understanding the dynamics of the informal sector.

The paper has two objectives. First, using various rounds of the Family Income and Expenditures Survey (FIES) conducted by the National Statistics Office (NSO), profiles of household are constructed by examining sources of income and household heads’ demographic, occupational, and locational characteristics. Second, we employ empirical methodologies to verify the results presented by the various profiles. These methodologies are concerned with the estimation of family income functions, which can be used to model household income inequality and structural decision functions pertaining to household entrepreneurial decisions.