International Journal of Scientific & Engineering Research, Volume 4, Issue 12, December-2013 2203
ISSN 2229-5518
By
The Islamia University of Bahawalpur ma_eco@hotmail.com
This research paper is investigating the determinants of the female income in informal sector and formal sector. It also highlights which sector is easily accessible for female as a source of income. A comparative analysis of the female earnings between formal and informal sector have been done which shows that informal sector is more appropriate as a source of income for females. The data in this research paper has been collected from Ali Pur through questionnaires. One thousand women have been interviewed 500 form formal sector and five hundred from informal sector and then a comparison has been made considering the factors which affects the female earnings in formal and informal sectors. This comparison has been done the help of econometric models consisting of all the variables that affect the female income in both sectors whether they affect positively or negatively.
Women labor force participation rate in Pakistan, according to old data collection technique was exceptionally low at just 14.4%, as compared to 70.3% for men, while unemployment rate was 16.5% for women and 6.7% for men (FBS 2003, PP.15, 30) the share of women’s earnings in earned income of household was 26% of that of men earnings while their economic activity rate as percentage of that of men was 40% (MHDC, 2000). According to revised data collection technique of federal Bureau of statistics, women’s participation rate has been increased to 50% instead of 14.4% in 2003. According to revised data collection, if a women is involved doing work such as harvesting, sowing seeds, cotton-picking, maize and rice husking, livestock and poultry breeding, agricultural forming activities, construction work, collection of fire-wood and cotton-sticks, fetching water, making clothes, sewing, knitting, marketing and preparation of goods and materials, then she will be included in labor force. It explained that informally employed women have increased the labor force participation rate of women up to 50%. Informal sector employment is generally a larger source of employment for women than for men in the developing world. In the developing countries, 60% or more women workers are informally employed (outside agriculture), through in Asia the proportion of women and men is roughly equivalent.
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All those types of employment which offer regular wages and hours, which carry with them employments rights and on which income tax is paid is called the formal sector. It is a sector which encompasses all jobs with normal hours and regular wages and is recognized as income sources on which income taxes must be paid which is opposite of informal sector. The employment sector, comprising ‘proper’ jobs that are usually permanent, with set hours of work, agreed levels of pay and sometimes pensions and social security rights.
It is a sector which encompasses all jobs which are not recognized as normal income
sources, and on which taxes are not paid. The term is sometimes used to refer to only illegal activity, such as an individual who earns wages but does not claim them on his or her income taxes, or a cruel situation where people are forced to work without pay. However, informal sector could also be interpreted to include legal activities, such as jobs that are performed in exchange for something other than money which is opposite of formal sector.
1. To find out determinants of female earnings in formal and informal sectors.
2. To find out which sector is easily accessible for females as a source of income.
This research is based on the primary data and the field research is conducted in Alipur. We
selected this area for the collection of our empirical data for several reasons. Firstly Pakistan is a developing country in which female earning in formal and informal sector plays an important role and Alipur constitutes a good location for our research related with formal and informal sector. Secondly, we live there and we have valuable contacts that helped us to touch with females. Total Population is
40000 and 1000 females for Formal Sector and 1000 females for Informal Sector are selected as a sample size for this study. And the data were collected within 2 weeks.
In our research the variables are
• Type of institution
• Age
• Education
• Response of the family
• Opinion about women’s job
• Working hours
• Family income
• Family size
Equation of the Female Earning in Formal Sector
FEF = β0 + β1TI + β2A + β3E+ β4ROF+ β5OPJ+ Ui
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Where
FEF =Female Earning in Formal sector
TI = Type of Institution
A = Age
E = Education
ROF =Response of Family OPJ =Opinion about Job Ui = Random error
Where female earning in formal sector is our dependent variable and the independent variables is type of institution, age, education, response of the family, opinion about women’s
job.
FEF = β0 + β1FI + β2AFS+ β3WH
Where
FEI =Female Earning in informal sector
FI =Family Income FS =Family Size WH =Working Hours Ui = Random error
Where female earning in informal sector is our dependent variables and the independent variables are working hours, family income, family size.
For this we use the simple regression model. Data has analyzed using statistical package for social scientists (SPSS). The regression equations have also estimated with OLS regression model for comparison of female earnings in formal and informal sector.
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Regression results are shown in table 1. All coefficients are the positive sign. All coefficients are also statistically significant.
In quantitative analysis we show the results of Female earnings in Informal Sector
through this table no.1.
Source: Survey
IJSER
Female earning in informal sector is our dependent variable in this study and significantly dependent upon the family Income, Family size, working Hours. When there is increase in family income the female earnings increases. When the family size will increase the female earning will decrease. Working hours are also positively related with the dependent variable. When there is increase in working hours the total earning will also increase. R square shows the goodness of fit and its value is 0.630 and the value of adjusted R square is 0.619. T test is used to check the significance of the β’s. Where β’s are significant when the value is greater than 2. Here our result shows that all β’s are significant. F test also check the significance of the overall model.
In quantitative analysis we show the results of Female earnings in Formal Sector through this
table no.2
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Table no.2: Regression results of female earning in formal sector
Source: Survey
SAdjusted R ESquare FRTest
Female earning in formal sector is our dependent variable in this study and significantly dependent upon the type of institution, age, education, role of women and opinion. Type of institution is significant and positively related with the female earning. When there is increase in types of institution female learn more skills and increases the earnings. Age is also significant and positively related with the female earning. Education is significant and also positively related with the dependent variable. When the level of education is high the female earning will also be high. Family response is significant and also positively related with the female earning. Better family response will causes the higher level of female earning. Opinion about business is also significant and positively related with female earning in formal sector. If the opinion about job will good then chances of earnings will be high.R square shows the goodness of fit and its value is .467 and the value of adjusted R square is 0.433. T test is used to check the significance of the β’s. Where β’s are significant when the value is greater than 2. Here our result shows that all β’s are significant. F test also check the significance of the overall model.
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Age of respondent in formal sector | Age of respondent in Informal sector | ||||
Age | Frequency | Percent | Age | Frequency | Percent |
15-20 20-39 40-49 50-59 Total | 100 560 290 50 1000 | 10.0 56.0 29.0 5.0 100 | 15-20 20-39 40-49 50-59 | 220 500 240 40 1000 | 22.0 50.0 24.0 4.0 100 |
Source: Survey
IJSER
This table shows the distribution of the respondent’s monthly earnings in formal and informal
sector. Ten percent female earn in the age of 15-20 in formal sector and 22.0% in informal sector. Fifty six percent female earn in the age of 20-39 in formal sector and 50% in informal sector. Twenty percent female earn in the age of 40-49 in formal sector and 24% in informal sector. Five percent female earn in the age of 50-59 in formal sector and 4% in informal sector.
Education of respondent in formal sector | Education of respondent in Informal sector | ||||
Education | Frequency | Percent | Education | Frequency | Percent |
Primary Metric Intermediate Graduation Master Above master Uneducated Total | 30 80 190 110 390 190 10 1000 | 3.0 8.0 19.0 11.0 39.0 19.0 1.0 100 | Primary Metric Intermediate Graduation Master Above master Uneducated | 160 110 110 130 230 20 240 1000 | 16.0 11.0 11.0 13.0 23.0 2.0 24.0 100 |
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Source: Survey
This shows the respondents education which is 3% in the Primary education in formal sector and
16% in informal sector. Eight percent are getting education of Metric in formal sector and 11% are in informal sector. In formal sector 19% are getting education of Intermediate and 11% in formal sector. Eleven percent are getting education of Graduation in formal sector and 13% in informal sector. Thirty nine percent have Master education in formal sector and 23% have in informal sector. Nineteen percent have education of above master in formal sector and 2% in informal sector and 1% female is uneducated in formal sector and 24% in informal sector.
Source: Survey
JSER
This table shows that 87% female are in the favor of opinion about women’s job in formal sector
and 91% are in the favor of informal sector and 13% are unfavorable for women’s job in formal sector
and 9% are in informal sector.
Type of institution from where they got skill in formal sector | Type of institution from where they got skill in informal sector | ||||
TOI | Frequency | Percent | TOI | Frequency | Percent |
Govt Private Total | 910 90 1000 | 91.0 9.0 100 | Govt Private | 200 800 1000 | 20.0 80.0 100 |
Source: Survey
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This table shows that 91% female get their skills from Government Institute in formal sector and
20% in informal sector and 9% female get their skill from Private Institution and 80% in informal sector.
Source: Survey
This table shows that 40% response of the family is very supportive for formal sector and 68%
in formal sector. Forty four percent response of the family is supportive for formal sector and 22% in informal sector. Twelve percent response of the family is indifferent in formal sector and 3% in informal sector. Three percent are non supportive in formal sector and 5% in informal sector. One percent response of the family is badly reacted in formal sector and 4% are in informal sector.
Family size in formal sector | Family size in Informal sector | ||||
FS | Frequency | Percent | FS | Frequency | Percent |
1 2 3 4 5 6 | 0 30 30 110 150 170 | 0.0 3.0 3.0 11.0 15.0 17.0 | 1 2 3 4 5 6 | 10 40 20 100 150 130 | 1.0 4.0 2.0 10.0 15.0 13.0 |
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7 8 9 10 11 12 13 Total | 160 210 70 70 0 0 0 1000 | 16.0 21.0 7.0 7.0 0.0 0.0 0.0 100.0 | 7 8 9 10 11 12 13 | 170 70 80 90 30 100 10 1000 | 17.0 7.0 8.0 9.0 3.0 10.0 1.0 100.0 |
Source: Survey
According to the survey results table 6 shows that there are 2 members in the family that are 3% in formal sector and 4% in informal sector. There are 3% families in which there are 3 members in formal sector and 2% families in informal sector. There are 11% families in which there are 4 members in formal sector and 10% families in informal sector. In formal sector the minimum family size is 2 and in informal sector the minimum family size is 1 and the maximum family size in formal sector is 10 and in informal sector the maximum family size is 13.
Family income in formal sector | Family income in Informal sector | ||||
FI | Frequency | Percent | FI | Frequency | Percent |
1000-10000 10000-20000 20000-40000 40000-80000 80000-120000 Total | 120 120 420 280 50 1000 | 12.0 12.0 42.0 28.0 5.0 100.0 | 1000-10000 10000-20000 20000-40000 40000-80000 80000-120000 | 390 200 230 200 10 1000 | 39.0 20.0 23.0 20.0 1.0 100.0 |
Source: Survey
This table shows that family income from 1000-10000 have 12% in formal sector and 39% in informal sector. From 10000-20000 the family income is again 12% in formal sector and 20% in informal sector. From 20000-40000 the family income increases at 42% in formal sector and 23% in informal
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sector. From 40000-80000 the family income is 28% in formal sector and 20% in formal sector. From
80000-120000 the family income is 5% in formal and 1% in informal sector.
240
400
20
40
0
24.0 7
40.0 8
2.0 9
4.0 10
0.0 11
100
170
120
50
0
Source: Survey
This table shows the working hours of female earnings. One percent female work 4 hours in formal sector and 12% female work in informal sector. Twelve percent female work 5 hours in formal sector and 21% in informal sector. The minimum working hours of female earning in formal sector are 4 and in informal sector the minimum working hours are 2 and the maximum working hours in formal sector are 10 and in informal sector maximum working hours are 12.
The study has find out the comparison of female income in formal and informal sector. With the help of OLS regression model, results have been obtained. Percentage has also been calculated. The dependent variables are female earnings in formal sector and female earnings in informal sector. Results show that informal sector is easily accessible for females as a source of
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income. Results show that 40% response of the family is very supportive for formal sector and 68% in formal sector. Results also shows that 87% female are in the favor of opinion about women’s job in formal sector and 91% are in the favor of informal sector and 13% are unfavorable for women’s job in formal sector and 9% are in informal sector. Determinants of female earnings are different in formal sectors and informal sectors. Female earnings in formal sector is determined by type of institution from where you got skill, age of respondents, education and response of the family, opinion about job and Female earning in informal sector is determined by family income, family size, and working hours. Type of institution from where you got skill, age, education, response of the family, opinion about job, family income and working hours are positively affect the dependent variables and only family size is negatively affect the dependent variable.
The following policies may be adopted for the female earnings in formal and informal sector:
1. The government should establish special training institutes for household workers that provide skill for female workers.
2. The government should give the free education to the females so that they can easily get job.
3. The government should make the best policies for the working time for females.
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