self-employed and employers are similarly challenged to survive and grow into job-creating firms. They believe there is little benefit from registration. Their heterogeneity is found in their business practices. Fifth, after controlling for individual and job characteristics, access to public services is weakly associated with the probability of working in an informal job, though access to mobile phones is high across all job types, suggesting that digital connectivity is a valuable policy focus for informal (and formal) workers.

# **2. Data and Definitions**

We are interested in understanding the nature of jobs, both in terms of the worker’s relationship to the firm owner and in terms of job benefits and earnings potential offered by the firm. For the former, we consider three groups: employees who work for others, selfemployed who do not have paid employees, and employers. For the latter, we use the firm organization concept put forth by Bandiera et al. (2022) and refer to informal enterprises as those that are less “organized” in terms of business practices, linkages to the organized economy and institutions, spillovers to the household, and value-added, as compared to more organized and higher value-added formal firms.<sup>12,13</sup> We use four data sets in the analysis. First, we use the Global Monitoring Database (GMD) to create a profile of urban informal workers in 26 SSA countries. The GMD is the <mark>World Bank’s repository of harmonized household surveys used for poverty monitoring.</mark> We limit the sample to the 26 countries that provide information on employment type, education level, and labor benefits for wage employees, to classify workers as formal or informal.<sup>14</sup> The countries included in the sample represent about 85 million urban workers, equivalent to 68 percent of the total urban workforce of Sub-Saharan Africa.<sup>15</sup> Table A1 in the Appendix lists the survey and year used for each country. Since this paper’s focus is urban workers, we restrict the analysis to urban observations and to people 15 years of age or older.

> 12 Firm registration status, a common variable used in the literature to proxy firm formality, is inadequate for three reasons. First, most SSA economies have limited reach of, requirements for, enforcement of, and benefits tied to legislation regulating firms and labor markets, making registration status a poor proxy for informal firm characteristics. For example, Kenya does not require self-employed firm owners to contribute to social security and most do not reach the VAT threshold. Second, firm registration requirements differ across countries, resulting in firms of similar nature in different countries being assigned different formality status. Third, registration status is not an effective policy variable to improve the quality of firms and jobs (Levenson and Maloney 1998).

> 13 For measurement purposes, ILO (2018) defines an informal firm based on bookkeeping practices, registration status, place of work, connection with household, and firm size (fewer than 6 workers), which map to many of the Bandiera et al (2022) concepts. These variables are largely not observed in our data so we use proxies to identify informal enterprises and workers.

> 14 The definition of employment in the GMD did not change during this period, although the 19th ICLS adopted a new definition of employment in 2013.

> 15 Angola, Benin, Burkina Faso, Burundi, Cameroon, Chad, Côte d’Ivoire, Eswatini, Gabon, Ghana, Guinea, Guinea-Bissau, Kenya, Liberia, Malawi, Mali, Niger, Nigeria, Senegal, Sierra Leone, South Africa, São Tomé and Príncipe, Togo, Uganda, Zambia and Zimbabwe.

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