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When seeking to increase their tax revenues, policy makers face a likely tradeoff between decreasing personal income tax rates (making formalizing more attractive and potentially contributing to revenue) and alternatively raising tax rates (potentially slowing down the formalization of the economy if people prefer informal employment). Evidence on formal versus informal earnings and job characteristics in different sectors is limited in African countries, and in particular very little is known about the impact of tax changes on the extent of informality. This paper therefore estimates the personal income tax responsiveness of the extensive margin of formality, i.e. the propensity to be a formal as opposed to an informal worker, for Ghana, Rwanda, Tanzania, and Uganda, using repeated cross-sections of household data and applying grouping estimator techniques. Perhaps because of labour demand constraints and other frictions, the paper finds non-significant relations between the formal employment share and the formal-informal earnings differences. [ABSTRACT FROM AUTHOR]

Based on a combination of detailed survey data and in-depth interviews with informal workers in the construction, micro-trade, and transport sectors in urban areas of Kenya and Tanzania, this article explores the extent to which informal worker associations facilitate member access to formal social insurance schemes. The article provides unique insight into what characterises informal workers, and the circumstances under which associations may ensure social protection for their members. The analysis shows that members of informal worker associations are significantly more likely to participate in formal insurance schemes compared with non-members, albeit with some variation across location, sector, and worker types. These divergences relate partly to sector-specific and institutional constellations, as well as the ways in which informal worker associations function. Moreover, the article shows that informal worker associations often play a dual role by providing both direct short-term social cushioning and enabling enrolment in formal social insurance schemes. Their part in ensuring the achievement of universal social protection must therefore not be underestimated. [ABSTRACT FROM AUTHOR]