What levels of informality tackle poverty in Africa? Evidence from dynamic panel threshold analysis

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2023-04-26

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Emerald

Abstract

Purpose – The paper validates the threshold argument in the informality–poverty nexus. Recent literature and policy have argued the existence of a threshold in the relationship. Design/methodology/approach – The study adopts dynamic panel threshold analysis, estimated within the framework of system Generalized Method of Moments (SGMM) to control for endogeneity and simultaneity. Data from 40 selected sub-Saharan African countries between 1991 and 2018 are used for the study. Findings – Empirical results confirm the existence of an average threshold of 31% share of informality in GDP. Also, the paper finds that threshold of informality that addresses mild and severe poverty varies between 24.32 and 36.75%.

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Keywords

Poverty, Informality, Africa, Threshold

Citation

Bolarinwa, S. T., & Simatele, M. (2024). What levels of informality tackle poverty in africa? evidence from dynamic panel threshold analysis. African Journal of Economic and Management Studies, 15(1), 60-72. https://doi.org/10.1108/AJEMS-07-2022-0279

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http://hdl.handle.net/20.500.11837/3275

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