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Global Poverty Research Group

Gender, education and occupational outcomes:
Kenya's informal sector in the 1990s

Rosemary Atieno and Francis Teal

Global Poverty Research Group

August 2006

SARPN acknowledges the ESRC Global Poverty Research Group as a source of this document:
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In this paper we examine the effects on women.s employment outcomes of differences in levels of education and experience for the Kenyan labour market in the late 1990s. The issue of employment opportunities within sub-Saharan Africa is becoming an increasingly pressing policy concern given the failure to create wage jobs for the rapidly growing workforce. Kingdon, Sandefur and Teal (2005) present data for five African countries - Ghana, Tanzania, Uganda, Ethiopia and South Africa - showing that the growth in employment opportunities has been concentrated in the non-wage sector. In particular they show that by far the most important source of new jobs is in the non-farm self-employment sector. One of the first studies emphasising the importance of understanding employment creation outside the wage sector - the informal sector - was a study of Kenya, ILO (1972). In that study data was fragmentary but an estimate was presented for Nairobi in 1969 that wage employment in the formal sector employed 65 per cent of men and 22 per cent of women aged over 14, the balance was allocated to self-employment, informal employment and miscellaneous (see ILO 1972, pages 54 and 343)). The study argued that understanding the potentially productive role of informal employment was of particular importance for women who were most dependent on this sector. Data are now more complete and for the data set on which this paper is based, the 1997 Welfare Monitoring Survey III, we will show that for the urban sector only 42.1 per cent of men and 17.8 per cent of women had wage jobs which we identify with the public and formal private sectors. While wage employment is slightly broader than these two categories this figure nevertheless serves to highlight the extent to which the informal sector has grown in relative importance over the decades from 1970 to 1999.

It is in the area of micro-enterprises and household based activities that employment growth has exploded. The 1999 national survey of micro and small scale enterprises (MSEs) recorded that about 26% of the total households in the country are engaged in some form of SME activity (Republic of Kenya Central Bureau of Statistics, K-REP and ICEG (1999)). Our data is individually based and differs from earlier data collection exercises in that the definition of unpaid family labour - as those who work without pay in an economic enterprise operated by a related person living in the same household - was applied to both rural and urban based enterprises. If the informal sector is defined as comprising the private informal sector and household based employment then 57 per cent of women are in this sector and 36 per cent of men (see Table 1 below). By this definition such informal employment dominates the economic activities of women.

Kingdon, Sandefur and Teal (2005) present a classification of economies in sub-Saharan Africa as ones facing structural unemployment of which the most important is South Africa, those characterised by a substantial element of search unemployment, of which the Ethiopian urban sector seems to be a clear example, and what they term economies where there is "high informality and low unemployment". Kenya clearly fits into this last category as measured unemployment is low (only 6 per cent of the population aged 15 to 65 are classified as unemployed) and employment is dominated by informal activities.

This pattern of increasing informalisation of the labour force has proceeded in parallel with a rapid expansion of educational opportunities. The question we pose in this paper is whether this combination of increased educational opportunities and informalisation has been beneficial for women relative to men. Two issues have therefore featured prominently in discussions as to how education may impact on the welfare of women. First has been the view that increases in education act to increase women's participation in the labour force. Second is that it enables them greater access to formal sector jobs. In studies of female labour supply in developing countries, the bulk of women's work is considered to take place in the "non-market" economy, either at home or in the informal economy (World Bank 1995). Has the expansion of informal activities benefited women by providing a larger range of activities which can be combined with their domestic responsibilities? Formal education is only one dimension of the human capital differences between men and women. A second, on which we have data, is their time in the labour force or potential work experience. We investigate if there is evidence from the cross section that a longer time in the workforce benefits women relative to men.

Our data set enables us to identify the range of informal employment outcomes which we will show are of importance for answering the questions we have just posed. The paper is organised as follows. Section 2 reviews the literature on gender and occupational choice, section 3 presents our data and the results are in section 4. A final section concludes.

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