Abstract

This study indicates that in Jigjiga, the informal sector clearly plays a buffer role. From sampled respondent, the researcher analyzed the participants in the informal sector and tries to compare their earnings based on the activities they transact and the amount of income they earn. The study revealed that the average monthly earning of both gender was far better than some formal sector activities. Thus, the legal minimum wage indicates that the informal sector plays an undeniable role at the household level and the town, in general. Individual differences on employment are a function of factors which influence the demand and supply of labor; this study examines the supply side only. Probit model was used for analysis. The results of the study showed that married participants and households with large family size show significant and positive likelihood in informal sector participation. Educational level also influenced participation in the informal sector in both gender. Meanwhile, the Probit model result showed that for every male participant, the likelihood of involvement in informal sector declines as age increases and is significant while for female households, age was insignificant. Finally, in both gender, personal attributes is not a significant determinant of participation in the informal sector. 

Key words: Self-employed informal sector employment, probit model, Jigjiga.