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Spatial and sectoral heterogeneity of occupational choice in Cameroon (Inglês)

This paper investigates the relationship between location, agglomeration, access to credit, informality, and productivity across cities and industries in Cameroon. Emphasizing the link between micro-foundations and the data, the paper develops and estimates a structural model of occupational choice in which heterogeneous agents choose between formal entrepreneurship, informal entrepreneurship, and non-entrepreneurial work. Their decision-making process is driven by institutional constraints such as entry costs, tax enforcement, and access to credit. The model predicts that agglomeration has a non-monotonic effect on formalization, and entrepreneurial profits increase with agglomeration effects. Estimating the model by the generalized method of moments, the paper finds that the returns to capital and labor are not uniform across sectors and cities. Manufacturing industries are highly constrained in capital and the elasticity of capital is higher in Yaoundé and Douala, whereas labor elasticity is higher in Kribi. Counterfactual simulations show that an increase in roads provision can have a substantial impact in terms of output, formalization, and productivity. A reduction in the current interest rate has a large and significant impact on formalization and no significant effect on business creation. Likewise, while the current tax rate is suboptimal for most cities, a tax reduction policy would have a much greater impact on formalization than on business creation. These effects differ substantially across cities and sectors, suggesting that those policy instruments could be implemented accordingly to support formalization and business creation.


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    Bougna Lonla,Theophile, Nguimkeu,Pierre

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    Documento de trabalho sobre pesquisa de políticas

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  • Nome do documento

    Spatial and sectoral heterogeneity of occupational choice in Cameroon

  • Palavras-chave

    paved road; informal sector; reduction in tax rates; impact of tax reforms; supply of raw material; years of schooling; Entrepreneurship; lack of skill; method of moments; demand for labor; interest rate reductions; borrowing interest rate; cost of capital; returns to capital; harassment by police; degrees of freedom; incidence of corruption; labor demand curve; equilibrium wage rate; number of vehicles; distribution of wealth; price of capital; department of economics; development research group; share of employment; labour market outcome; credit market imperfection; output per worker; Water and Energy; trade and transportation; types of good; principal component analysis; class of model; local labor market; asymptotic covariance matrix; business creation; informal business; informal entrepreneurs; agglomeration effect; Population Density; entrepreneurial activity; manufacturing industry; agglomeration externality; summary statistic; occupational choice; initial wealth; commerce sector; business environment; horizontal axis; Informal Economy; road density; standard error; geographic concentration; borrowing constraint; geographical concentration; pay taxes; road provision; industrial sector; counterfactual simulations; Public-Private Dialogue; tax authority; tax authorities; entrepreneurial ability; concentrated industry; labor share; standard deviation; negative relationship; regression analysis; agricultural activity; theoretical model; agglomeration index; agriculture sector; public policy; government revenue; empirical evidence; empirical analysis; capital share; parameter vector; tax enforcement; individual characteristic; entrepreneurship rates; retail trade; estimation procedure; labor supply; spatial correlation; Job Creation; high wage; sectoral distribution; paper product; average share; principal factor; positive impact; wealth index; political capital; enterprise creation; population size; food industry; missing data; monthly wage; functional form; metropolitan city; road infrastructure; tax system; model prediction; social opportunities; rural transportation infrastructure; ols model; spatial distribution; tobacco product; labor legislation; employment opportunities; employment opportunity; water collection; local population; pioneering work; smaller one; high tax; fitted value; Business Climate; dynamic nature; population data; bottom quintile; spatial difference; empirical research; regional dimension; credit constraint; coastal lowlands; niche products; industrial base; urban region; urban hierarchy; production pattern; dairy product; employment share; Economic Policy; informal activity; average score; weighting scheme; weighted average; preferential scheme; market opportunity; social work; regional infrastructure; global market; construction industry; administrative delays; unfair competition; excessive bureaucracy; rubber products; country infrastructure; policy option; graphical representation; sewing machine; government contract; increased opportunity; greater access; bridge construction; Public Infrastructure; negative externality; credit association; kinship network; capital need; agricultural sector; manufacturing sector; road pavement; national employment; industry structure; total employment; household wealth; aggregate wealth; linear combination; Durable goods; collateral requirement; credit access; road improvement; electric irons; comparative advantage; increasing rate; productivity effect; remote area; increase productivity; transportation business; industrial productivity; infrastructure policy; infrastructure quality; small fraction; capital demand; production process; local economy; agglomeration economy; insurance activity; social security; local market; industrial concentration; transport equipment; labor input; total output; consumption good; probit regression; collateral credit; nonlinear effect; regression results; transport activity; parameter estimate; estimation result; moment estimator



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