Sector of activity and poverty status in Benin

Abstract

This article, based on the theory of labor market segmentation tries to assess the participation in the labor market in connection with poverty status. Using cross-sectional data from household standard living condition survey of 2006 and K-means algorithm, the paper shows that the labor market in Benin consists in five segments that can be characterized by irregular workers, rural vulnerable independent, rural competitive salaried, urban competitive salaried and a mixed group of protected employees and independent with capital. The poverty profile for each segment is produced. The segments of  rural vulnerable independent and that of  the rural competitive salaried proved to be the poorest. The poverty status is estimated with a continuous censored dependent variable with selection controlled for by the conditional probabilities deriving from a multinomial logit. Results show the presence of unobserved factors affecting participation in segments that influence poverty status.