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 labor 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 labor. Unemployment appears as a choice of last resort and made by truly "rationed" individuals