The Determinants of Selection into Non-agricultural Self-employment in Ghana

Selection into informal employment is frequently theorised as either an individual choice, for example, to avoid taxation or regulation, or as a structural feature of the formal labour market: for example, the rationing of opportunities prevents free entry into formal employment. However, participation in informal employment can also be understood as the outcome of choices made in the context of structural constraints outside the labour market. Such constraints include the distribution of assets, access to education, responsibilities for unpaid care work and social norms, among others. This article uses data from the Fifth Round of the Ghana Living Standards Survey (GLSS 5) to examine the determinants of selection into self-employment in non-agricultural household enterprises. The Fifth Round of the GLSS was administered with a special focus on non-agricultural household enterprises and provides a rich set of information on informal self-employment outside of agriculture. By considering a range of factors at the individual and household levels, the results of the data analysis will present a more nuanced view of participation in informal self-employment.JEL Classifications: J21, J24, O17, O55