Kenya. Detailed earnings regressions for Ghana revealed that apprenticeships do seem to offer a return in specific sectors, such as construction, especially in rural areas (World Bank 2001b). Similarly detailed analysis on Rwanda shows that the strong positive returns to apprenticeships occur in urban areas and are high for males, reinforcing the idea that occupational segregation hurts female earnings (World Bank, 2011a). But all this evidence suggests that much more analysis, including analysis of panel data sets, is required to fully understand the impact of this training approach.

Finally, in all regressions, the dummies included for region and district explained a substantial portion of the overall variance explained - 25-30% in Tanzania and Ghana, where we had over 100 separate location dummies each. This may partially reflect unmeasured spatial price differences. However, qualitative evidence from focus groups on the role of local conditions (local infrastructure, size of market area, behavior of local governments) suggest that local economic and political development is an important variable in HE success (see for example Kweka and Fox, 2011).

Although we have some highly significant coefficients, the r-squares are low in these regressions, suggesting that either earnings, or the explanatory variables, are not well measured. More specialized data sets properly controlling for selectivity and enterprise capital among other things are needed to substantially improve the earnings analysis.

# **5. Household enterprises and household welfare**

Section 3 showed that HEs are increasing importance as a source of employment and section 4 showed that this activity is attracting prime working age people of both genders - ones likely to have a family to support. Multivariate analysis showed there are substantial returns to primary education for HE owners, making it a good occupational choice for this group. But before policy makers and development strategies target this sector for growth, it is important to establish whether this activity does actually pay off as a livelihood source. This section analyses (i) the role of HEs in household livelihood strategies; and (ii) the relationship between HE as a livelihood strategy and household welfare.

## **Household enterprises as livelihood strategies**

The livelihood strategies that individuals and households adopt reflect the opportunities available to them and the expected remuneration (monetary or otherwise) from these activities. Changes in livelihood strategies represent the response of households to the macro level and local events; livelihood changes at the household-level feed back into sectoral and aggregate economic performance. The causality is not one way, but the results are changes in household income, wealth, and poverty. Livelihood analysis recognizes that the economic activities of individuals are the result individual and household decisions, takes into account the essentially communal nature of household economic activity (see Chambers and Conway, 1991). From an economic point of view, livelihoods can be characterized by the structure of income sources in the household. This approach explicitly recognizes both primary and secondary economic activities.

Although agriculture is still the most common income source in the countries analyzed here, earnings from informal non-farm enterprises are an increasingly important income source for households (Figure 13). These earnings have been has been a source of income for decades in about half of Ghanaian households, and are rising as an income source in countries in Eastern 23