Is the Informal Sector Constrained from the Demand Side?

Bohme, Marcus; Thiele, Rainer

Is the Informal Sector Constrained from the Demand Side?

2011

Bohme, Marcus | Thiele, Rainer

Employing a unique dataset that covers households from six West African capitals, this paper provides new evidence on the demand for informal sector products and services. Authors first investigate whether demand linkages exist between formal and informal products and distribution channels. In a second step, authors estimate demand elasticity's based on Engel curves. Authors find strong demand-side linkages between the formal and informal sector, with the exception that informal goods are hardly bought through formal distribution channels. The estimated demand elasticity's tend to show that rising incomes are associated with a lower propensity to consume informal sector goods and to use informal distribution channels.

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accounts agricultural economics business associations capacity building capital market development economics diversification econometric models economic development economic growth economic policies economic statistics entrepreneur equipment expenditure farmers fixed costs growth theory households human capital instrument insurance liquidity marginal utility microcredit microenterprises profitability reinvestment savings small enterprises start-up taxis union value added

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Market failure; Financial support; Physical capital; Wealth; Advanced economy; Risk-averse individuals; Trust fund; Checks; Receipts; Earnings; Money lenders; Endowments; Credit institutions; Credit constraint; Productive investment; Price risk; Expected utility; Retained earnings; Gdp; Internal finance; Information on investment; Price uncertainty; Lottery; Micro-finance institutions; Political economy; Labor market; Small-scale entrepreneurs; Holding; Transition country; Inventory; High interest rates; Demographic characteristics; Capital returns; Lack of access; Internal funds; Capital stock; Capital shortages; Expenditures; Liquidity problems; Opportunity cost; Micro-credit; Risk perceptions; Portfolio; Moral hazard; Borrowing; Cost of capital; Capital cost; Interest rate; Capital injection; Family finance; Marginal product; Safe asset; Business owners; Self-employment; Insurance market; Small business; Investing; Trading; Enterprise performance; Business economics; Capital requirements; Barriers to entry; Bank credit; Financial resources; Household wealth; Financial means; Trade sector; Micro-enterprise; Expected value; Insurance products; Access to credit; Rates of return; Business activities; Information asymmetries; Market constraints; Dummy variable; Excessive risk; Durable goods; External finance; Capital constraint; Degrees of risk; Transition economy; Credit market; Business activity; Credit rationing; Access to finance; Marginal utility of consumption; Middle income countries; Income growth; Micro enterprises; Job creation; Information on entrepreneurs; Investment behavior; Access to formal credit; Developing country; Labor force survey; Market economy; Market interest rate; Female entrepreneurs; Business risk; Production function; Credit constrained firms; Purchasing power; Risk premium; Rate of return; Capital accumulation; Purchasing power parity; Entry barriers; Risk aversion; Sources of finance; Marginal cost; Liquidity constraint; Economic constraints; Accumulation rate; Loan; Durable; Micro data; Family loans; Liquidity premium; Source of credit; Micro-finance; Liquid wealth; Collateral; Level of risk; Entrepreneurial activity; Formal banks; Bank policy; Tax; Access to capital; Credit history; Contractual obligations; Biases; Group of firms

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http://hdl.handle.net/10986/27330

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Is the Informal Sector Constrained from the Demand Side?

2011

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Información bibliográfica