Abstract
At the heart of policies aimed at eliminating informal street trading seems to be a ‘marginalist’ perspective of the sector which does not see it as contributing to socio-economic development. What is not clear, however, is what underlies the financial dysfunctionality associated with the sector. Using a sample of 303 inner city street traders drawn from Johannesburg, a large South African city, tests of regression and mediated regression were used to test theory that predicts the existence of certain human capital relationships that may contribute to increased earnings for these traders. Findings suggest that certain human capital relationships in this sector may differ from those normally found in formal working contexts, in that although education is significantly associated with earnings, continuance satisfaction, experience and expenditure of effort, or hours worked per day, all do not mediate relationships between education and earnings. It is suggested that current policies might be keeping traders in a state of ‘flux’, where human capital transmission to financial performance might be unable to take root through seeking to ‘crack down’ on the sector instead of investing in the sector to enable its functionality, and hence its potential contribution to economic development.
Highlights
According to the tenets of human capital theory (Mincer, 1958; Becker, 1964), investments in learning and knowledge in the form of human capital are expected to contribute to increased individual productivity
Human capital has an especially important role to play in the economic development of countries in the Sub-Saharan African context, where resource constraints have held back investments in education (Zelleke, Sraiheen & Gupta, 2013)
Education in the form of schooling was found to be significantly associated with street trader earnings, it is concluded that the mediation mechanisms through which schooling transmits to street traders in this context seems to be independent of intrinsic satisfaction, specific human capital in the form of experience and effort invested in the form of hours worked per day
Summary
According to the tenets of human capital theory (Mincer, 1958; Becker, 1964), investments in learning and knowledge in the form of human capital are expected to contribute to increased individual productivity. Human capital investments contribute to productivity at the level of countries (Ahmed & Krishnasamy, 2013), as well as at the level of the global economy (Butnaru & Matei-Gherman, 2012). Despite a voluminous body of literature that supports the tenets of human capital theory across different contexts, research in the inner-city street trading sector seems to contest its predictions. The informal trade sector has become an important part of the South African economy (Ligthelm, 2005); approximately 60% of developing country employment is in the informal sector, as the formal sector has been unable to absorb labour and production processes in the same way (Sinha, 2010). The informal sector is typically defined as economic activities that involve the production or distribution of goods and services that are not registered and regulated in contexts where similar activities are regulated (United Nations, 1996)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
