Do only wage earners count?

Ask an Economist
Question: 

Burkina Faso has an employment rate of about 15%, give or take. Approximately 85% of the population is subsistence farmers. Does this mean the country's economy is supported by the 15% of the population who are receiving a wage (not including foreign aid)?

Answer: 

The answer is no. It is not correct to conclude that Bukina Faso’s economy is supported by only 15% of the population. It is a common challenge in developing countries to appropriately account for employment and the economic contributions of a large informal sector of the economy. For example, many subsistence farmers are productive contributors to the economy but are not registered as formal employees and therefore are not properly reflected in many government statistics. It is likely that a large fraction of the subsistence farmers in Burkina Faso are not registered as formal employees but contribute with their labor to agricultural production for self-consumption and in many cases trading in local markets or villages. The fact that it is difficult to properly measure their contribution does not mean that these subsistence workers do not contribute to the economy. In this case , we would need to augment standard statistics with approximate measures of economic contribution from subsistence farming.

Tags: 
Last updated on November 8, 2017