The choice of the working sector in transition: Income and non-income determinants of sector participation in Kazakhstan

This study compares the individual, household and location characteristics of private employees, the self-employed, the unemployed and the economically inactive in Kazakhstan making use of a 1996 World Bank Living Standards Measurement Survey. The purpose is to understand whether the process of transition has determined a selection of workers exiting the state sector and entering the three relatively new pools of private employees, self-employed and unemployed. An occupational choice model is used to explore the determinants of sector participation. It is found that income opportunities are similar between the private and self-employment sectors, that the private sector is not necessarily the workers first choice and that non-income determinants including local economic and labour market conditions and household related factors explain better than income the choice of the working sector. Self-employment seems to be a key sector in understanding the mechanisms of sector choice and the reallocation of labour. Unemployment appears as a choice of last resort and made by truly rationed individuals. © The European Bank for Reconstruction and Development, 2000.