Labour Market Entry and Earnings: Evidence from Tanzanian Retrospective Data

We exploit a unique dataset of retrospective information from urban Tanzania to estimate the effect of early labour market experiences on adult labour market outcomes. We consider four labour market entry states – wage employment, selfemployment, employment in the family business, and unemployment - and estimate how final earnings are associated with that entry state. The findings suggest that how individuals enter the labour market does matter for final outcome. We find that for those able to access wage employment, an initial period of unemployment while searching for a wage job may be preferred to an initial period in self-employment or the family business. However, for the two thirds who searched for an average of 5 years and still did not find a wage job, the gamble does not pay off.