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Citation Information

Type Working Paper - REDI3x3 Working paper 17
Title Entry into and exit from informal enterprise ownership in South Africa: An analysis of the 2013 Survey of Employers and Self Employed and 2013 Quarterly Labour Force Survey
Author(s)
Publication (Day/Month/Year) 2016
URL http://www.redi3x3.org/sites/default/files/Lloyd & Leibbrandt 2016 REDI3x3 Working paper 17 -​Transitions into informal enterprise ownership.pdf
Abstract
This paper provides an analysis of transitions in and out of informal enterprise activity. Using data from the Survey of Employers and Self-Employed (SESE) together with panel elements of the Quarterly Labour Force Survey (QLFS) we observe entering as well as exiting informal enterprises in SESE. Within the broader context of labour market transitions in South Africa we describe the flow of individuals into informal enterprise ownership; describing with them the characteristics of the enterprises they establish relative to incumbent firms. We also profile firms which dissolve during the quarter following SESE and comment on the duration of firm entry. Our results suggest that exit is significantly higher among new firms, despite the higher market and employment value of some newly established informal enterprises. At the same time our results suggest clear differences in the transitions between informal enterprise ownership and employment elsewhere in the economy, on the one hand, and nonemployed states, on the other. These two situations seem to involve markedly distinct enterprises which reflect the labour market value of their owners. Entrant firms established by previously employed individuals have a higher market and employment value in comparison with incumbent enterprises and those newly established by individuals previously not-working. Despite this, many such firms survive for a short duration.

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