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

This paper aims at highlighting the debate on firm heterogeneity in the informal sector by testing whether entrepreneurial familial background impacts informal businesses outcomes in the West African context. In the USA, a literature aiming at understanding the high intergenerational correlation of the self-employed status shows that children of self-employed have better business performance than children of wage earners. However, it is not obvious that this result could be generalised to developing countries. Using 1-2-3 surveys collected in the commercial capitals of seven West African countries in 2001–02, this paper shows that children of self-employed, who own an informal business, do not have better business outcomes than children of wage earners, except when they choose a familial tradition in the same sector of activity. Thus, in the West African context, having a self-employed father seems not sufficient for the transmission of valuable skills and does not provide any advantage in terms of value added or sales if the activity is different from that of the father. 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.