Threshold models of the relationship between poverty and informality (1) in Africa
| Poverty headcount $1.90 | Poverty headcount $3.20 | Poverty gap $1.90 | Poverty gap $3.20 | |
|---|---|---|---|---|
| Lower Regime | Lower Regime | Lower Regime | Lower Regime | |
| Lag of Poverty | −0.7083* (0.4280) | −0.2842 (0.2633) | −0.1254 (0.3248) | −0.2361 (0.4619) |
| Income | −0.0052 (0.0065) | −0.0037*** (0.0012) | −0.0065** (0.00271) | 0.0057 (0.0095) |
| Informality | 7.1476*** (1.8824) | 3.9502*** (1.2644) | 2.6133** (1.0219) | 4.8093** (1.9386) |
| Constant | 178.0958*** (66.0849) | 34.3558 (26.1138) | 58.1655* (31.7729) | 126.3303 (89.7982) |
| Poverty headcount $1.90 | Poverty headcount $3.20 | Poverty gap $1.90 | Poverty gap $3.20 | |
|---|---|---|---|---|
| Lower Regime | Lower Regime | Lower Regime | Lower Regime | |
| Lag of Poverty | −0.7083* (0.4280) | −0.2842 (0.2633) | −0.1254 (0.3248) | −0.2361 (0.4619) |
| Income | −0.0052 (0.0065) | −0.0037*** (0.0012) | −0.0065** (0.00271) | 0.0057 (0.0095) |
| Informality | 7.1476*** (1.8824) | 3.9502*** (1.2644) | 2.6133** (1.0219) | 4.8093** (1.9386) |
| Constant | 178.0958*** (66.0849) | 34.3558 (26.1138) | 58.1655* (31.7729) | 126.3303 (89.7982) |
| Upper Regime | Upper Regime | Upper Regime | Upper Regime | |
|---|---|---|---|---|
| Lag of Poverty | −0.2636 (0.5368) | 0.1758 (0.1895) | −0.5205 (0.3645) | −0.3418 (0.4883) |
| Income | 0.0030 (0.0149) | −0.0021 (0.0034) | 0.0017 (0.0032) | −0.0099 (0.0092) |
| Informality | −4.4104** (1.8474) | −1.3609** (0.6647) | −1.5088* (0.8205) | −3.1068 (2.5780) |
| Upper Regime | Upper Regime | Upper Regime | Upper Regime | |
|---|---|---|---|---|
| Lag of Poverty | −0.2636 (0.5368) | 0.1758 (0.1895) | −0.5205 (0.3645) | −0.3418 (0.4883) |
| Income | 0.0030 (0.0149) | −0.0021 (0.0034) | 0.0017 (0.0032) | −0.0099 (0.0092) |
| Informality | −4.4104** (1.8474) | −1.3609** (0.6647) | −1.5088* (0.8205) | −3.1068 (2.5780) |
| Aggregate Model | Aggregate Model | Aggregate Model | Aggregate Model | |
|---|---|---|---|---|
| Lag of Poverty | −0.3139** (0.1342) | −0.1497*** (0.1497) | −0.2123** (0.1051) | −0.2442** (0.2088) |
| Income | −0.00087 (0.0010) | −0.0008 (0007) | −0.0040*** (0.0007) | −0.00004 (0.0009) |
| Informality | 5.6912*** (1.1877) | 0.5335 (0.4337) | 2.6617*** (0.4423) | 3.0236*** (0.6254) |
| Threshold Level (Stand E.) | 36.75*% (6.3343) | 24.32**% (11.0696) | 24.61% (17.7255) | 21.46**% (9.1687) |
| Threshold Bounds | (33.13–57.96) | (2.63–46.02) | (10–59.35) | (3.49–39.43) |
| Kink Slope | −0.2494*** (0.0846) | −0.3053*** (0.0837) | 0.4603*** (0.2720) | −0.2176*** (0.0717) |
| Linearity Test | 0.0000*** | 0.0000*** | 0.0000*** | 0.0000*** |
| No of Countries | 20 | 20 | 20 | 20 |
| No of Groups | 18 | 19 | 19 | 18 |
| No of Instruments | 4 | 5 | 4 | 5 |
| Sargan (Prob.) | 11.2139 (0.4255) | 19.4200 (0.3670) | 8.5400 (0.4300) | 29.1300 (0.1520) |
| AR1 (Prob.) | −3.7341 (0.0000) | −4.4651 (0.0031) | −3.8641 (0.0001) | −2.9754 (0.0003) |
| AR2 (Prob.) | −1.3240 (0.2302) | −1.7563 (0.3248) | −0.9455 (0.2984) | −2.452 (0.1936) |
| Aggregate Model | Aggregate Model | Aggregate Model | Aggregate Model | |
|---|---|---|---|---|
| Lag of Poverty | −0.3139** (0.1342) | −0.1497*** (0.1497) | −0.2123** (0.1051) | −0.2442** (0.2088) |
| Income | −0.00087 (0.0010) | −0.0008 (0007) | −0.0040*** (0.0007) | −0.00004 (0.0009) |
| Informality | 5.6912*** (1.1877) | 0.5335 (0.4337) | 2.6617*** (0.4423) | 3.0236*** (0.6254) |
| Threshold Level (Stand E.) | 36.75*% (6.3343) | 24.32**% (11.0696) | 24.61% (17.7255) | 21.46**% (9.1687) |
| Threshold Bounds | (33.13–57.96) | (2.63–46.02) | (10–59.35) | (3.49–39.43) |
| Kink Slope | −0.2494*** (0.0846) | −0.3053*** (0.0837) | 0.4603*** (0.2720) | −0.2176*** (0.0717) |
| Linearity Test | 0.0000*** | 0.0000*** | 0.0000*** | 0.0000*** |
| No of Countries | 20 | 20 | 20 | 20 |
| No of Groups | 18 | 19 | 19 | 18 |
| No of Instruments | 4 | 5 | 4 | 5 |
| Sargan (Prob.) | 11.2139 (0.4255) | 19.4200 (0.3670) | 8.5400 (0.4300) | 29.1300 (0.1520) |
| AR1 (Prob.) | −3.7341 (0.0000) | −4.4651 (0.0031) | −3.8641 (0.0001) | −2.9754 (0.0003) |
| AR2 (Prob.) | −1.3240 (0.2302) | −1.7563 (0.3248) | −0.9455 (0.2984) | −2.452 (0.1936) |
Note(s): ***, ** and * indicates 1%, 5% and 10% respectively. The standard error is indicated in the parenthesis
In running the models, the variables of other measures of informality, institutional quality, Government expenditure, Inequality, Trade Openness, Corruption and inflation are used as instrumental, exogenous and control variables
Source(s): Authors (2023)
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