Employment Generation and Earnings in the Informal Transport Sector in Nigeria

Abstract

Abstract: Unemployment and poverty are two of the challenges facing the Nigerian economy. Most urban semi and unskilled labour have found solace in the informal sector particularly informal transport. This paper examines employment generation and determinants of earnings in the informal transport sector in Nigeria using a case study. An adapted Mincerian equation and logistic models were used as tools of analysis. It was found that the informal sector is a source of employment for 21.7 per cent of jobless people; and 72.3 per cent of those who switched jobs from an informal activity to transport business. Household size, experience and operating hours were found to be significant determinants of earnings. The probability that a motorcyclist would earn at least the informal average in the Okada business when the operator has a driver license, owns the motorcycle, works on full time basis and also a member of the okada union is 0.8018, which is higher than that of an operator with the reverse attributes at 0.2849. The probability of earning at least the industry average by an educated operator was found to be higher than less educated operators. Employment and earnings can be improved upon in this sector if the government regulates its operations and segregate traffic. Key words: Transport; Informal; Employment; Earnings; Education