This study explores the labour market linkages between the informal and
formal sectors, using the first four waves of the National Income Dynamics Study (NIDS)
data. The main focus is on three groups of workers: working in the formal sector in all waves;
working in the informal sector in all waves; moving between the two sectors across the
waves. Those working in the formal sector in all waves are predominantly highly educated
male Africans, while those working in the informal sector in all waves are more likely to be
females with low educational attainment. Also, only 26% of informal sector workers in wave
1 transitioned to the formal sector in wave 4. Lastly, the econometric analysis indicates that
highly educated males and those with greater increase in years of educational attainment
between waves 1 and 4 are associated with a significantly greater likelihood of transitioning
to formal sector employment.