Mediating Roles of Educational Attainment and Urbanization on the Relationship between Male Self-Employment and Household Welfare in Sub-Saharan Africa applying GSEM
Using generalized structural equation modeling on Sub-Saharan African DHS data, this study reveals that male self-employment negatively impacts household wealth both directly and indirectly by limiting educational attainment and urbanization, with urbanization serving as the primary mediator that accounts for approximately 35% of this negative relationship.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the vast and diverse landscapes of Sub-Saharan Africa, the daily rhythm of economic life is often set by the individual working for themselves. For millions of men, self-employment is not a choice made from a position of strength, but a necessity driven by the lack of formal jobs. They work as street vendors, small-scale farmers, or artisans, selling their labor and goods directly to neighbors and local markets. This stands in contrast to wage employment, where a person works for a boss, receives a regular paycheck, and often enjoys more stability. A long-standing question in development economics has been whether this widespread self-employment lifts families out of poverty or simply keeps them there. To answer this, researchers must look beyond the job title itself and consider the environment in which the work happens. Two factors stand out as powerful forces shaping a family's future: the level of education a person has achieved and whether they live in a bustling city or a rural village. Education provides the tools to navigate complex markets, while urbanization offers access to better infrastructure, diverse customers, and higher-paying opportunities. Understanding how these pieces fit together is crucial for anyone trying to improve the lives of households in this region.
A recent study set out to untangle this complex web by examining the lives of over 67,000 men across multiple countries in Sub-Saharan Africa. The researchers used a sophisticated method to trace the path from a man's job to his family's overall wealth. They did not just ask if self-employed men were richer or poorer; they investigated how a man's job influenced his education and where he lived, and how those two factors, in turn, affected his family's financial well-being. The data came from large, nationally representative surveys that track health and living conditions, allowing the team to see patterns that might be missed in smaller studies. They compared men who worked for themselves against those who were wage earners, carefully accounting for differences in age, marital status, and the specific country they lived in to ensure a fair comparison.
The findings revealed a clear and somewhat sobering picture. Men who were self-employed tended to have lower levels of education and were more likely to live in rural areas compared to their counterparts who held wage jobs. This is not a coincidence but a reflection of how the labor market is structured in these regions, where self-employment often serves as a fallback for those with fewer opportunities. The study found that both education and living in an urban area act as powerful bridges to wealth. Families where the male head had more schooling were significantly better off, and those living in cities enjoyed a substantial financial advantage over those in the countryside. In fact, the boost in wealth provided by living in an urban setting was even larger than the boost provided by education alone.
When the researchers connected these dots, a specific story emerged. The negative impact of male self-employment on household wealth was not just a direct result of the job itself, but was also driven by the fact that self-employed men were less likely to have high education or live in cities. About one-third of the wealth gap between self-employed men and wage earners could be explained by these two factors. However, even after accounting for education and location, self-employment still carried a significant disadvantage. This suggests that the nature of the work itself—often characterized by irregular income, a lack of benefits, and limited access to credit—keeps these families from reaching the same financial heights as those with wage jobs. The study indicates that while self-employment is a vital survival strategy for many, it does not automatically lead to prosperity.
The implications of this research point toward a need for more nuanced policies. Simply encouraging more people to start their own businesses may not be enough to lift households out of poverty if those businesses remain isolated in rural areas or are run by individuals with limited education. The evidence suggests that interventions need to be holistic. Efforts to improve literacy and expand access to schools must go hand-in-hand with strategies to integrate rural areas into urban economies, such as building better roads and infrastructure. By helping self-employed men gain skills and connect to the opportunities found in cities, it may be possible to lessen the financial disadvantages they currently face. The study does not claim to have solved the problem of poverty, but it provides a clear map of where the obstacles lie, showing that the path to household wealth in Sub-Saharan Africa requires addressing both the skills of the worker and the place where they work.
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