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How Complete Are Labour Markets in Sub-Saharan Africa? Evidence from Panel Data in Four Countries

by Brian Dillon, Peter Brummund, Germano Mwabu | Wednesday, January 20, 2016

We develop and implement new tests for the completeness of rural labour markets in Sub-Saharan Africa. Our approach builds on the seminal work of Benjamin (1992), which uses consumer-producer households as a window into the functioning of rural markets. We use nationally representative panel data from Ethiopia, Malawi, Tanzania, and Uganda to extend a similar set of tests to a dynamic setting. We also develop a new set of empirical tests to distinguish between credit and labour market failures, and to determine whether labour market bottlenecks are on the demand or the supply side. We find evidence of market failures in all four countries. We find support for the presence of credit market failures in Malawi and Ethiopia, but not in Tanzania or Uganda. Results for Tanzania and Uganda are suggestive of constraints to labour demand, rather than to the supply of workers to family farms. These preliminary findings indicate that in these markets the problem is not that farms cannot find workers; it is that household members cannot find off-farm jobs.

More is coming soon.

Click here for a brief introduction of the project.