Does the Accumulating Human Capital Determine the Decision to Work as Self-employed? Evidence from Cameroon

Abstract

This paper analyzes the effects of the accumulating human capital proxied with the educational level on the decision to work as self-employed in Cameroon. The methodological approach mobilizes discrete-choice models on data drawn from the second Employment and Informal Sector Survey carried out by the National Institute of Statistics. By releasing the hypothesis of the uniqueness of the labor market and assuming that decisions to work as wage earned and as self-employed are occupational choices, empirical findings reveal that the willingness to become self-employed declines with the increase of the accumulating human capital. This main result suggests that becoming self-employed in Cameroon is not a return to human capital accumulation but a default option which is probably derived from the poor wage employment opportunities and the prevalence of the informal sector. By also suggesting that opportunity motivation is less common among individuals with a higher level of education, another explanation for this result may be the lack of formal entrepreneurial culture as well as educational and training programs targeting entrepreneurial skills development.