Publication

Employing a unique dataset that covers households from six West African capitals, this paper provides new evidence on the demand for informal sector products and services. The authors first investigate whether demand linkages exist between formal and informal products and distribution channels, and whether there is an overlapping customer base, which would imply that both formal sector wage earners and informal workers buy both formal and informal products using both formal and informal distribution channels. In a second step, the authors estimate demand elasticities based on Engel curves. They find a strongly overlapping customer base and strong demand-side linkages between the formal and informal sector, with the exception that informal goods are hardly bought through formal distribution channels.