PublicDisclosureAuthorized PublicDisclosureAuthorized PolicyResearchWorkingPaper10530 TheWelfareEffectsofStructuralChangeandInternalMigrationinTanzania AkuffoAmankwahRichmondAttah-AnkomahGoodielCharlesMoshiRobSwinkels DevelopmentDataGroup&PovertyandEquityGlobalPracticeJuly2023 PolicyResearchWorkingPaper10530 Abstract Structuralchangehasimplicationsforvariousdimensionsofdevelopment,includingpovertyreduction.However,theexistingempiricalliteratureonSub-SaharanAfricanecon-omies,includingTanzania,hasmainlyfocusedontrendsandpatternsinmacroeconomicoraggregatewelfareindi-cators,largelyprovidingadescriptiveanalysisofthenatureofstructuralchangeanditspotentialwelfareimplications.ThispaperprovidesmicroinsightsonstructuralchangeinTanzaniaanditseffectonwelfare,usingarecenthouseholdpaneldataset,whichwascollectedbetween2015and2021.Theresultsshowthatcross-sectorlabormovementsaredominatedbymovementsbetweenagricultureandservices,althoughmostindividualsstudiedwithinthetwoperiods continuetoremaininagriculture,withindustry’sshareinemploymentdecliningmarginally.Thepapershowsthatamongtheindividualsstudied,thenumberofpeoplewhoslidintopovertywasnearlytwicethenumberwhoescapedpoverty,andthisissignificantlyinfluencedbythepatternofsectoraltransitionsexperiencedbytheindividuals.Thefindingsshowthatinadditiontosectoraltransitionsandmigrationbeingimportanttoeachother,theyarebothdrivenbysimilarmicrofactors.Thepaperhighlightstheimportanceofeducation(particularlysecondaryorhighereducation)toincreasingthechancesofanindividualembarkingonwelfare-enhancingsectoralmovementandassociatedmigrationacrossdistrictsinTanzania. ThispaperisaproductoftheDevelopmentDataGroup,DevelopmentEconomicsandthePovertyandEquityGlobalPractice.ItispartofalargereffortbytheWorldBanktoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebathttp://www.worldbank.org/prwp.Theauthorsmaybecontactedataamankwah@worldbank.org. ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent. ProducedbytheResearchSupportTeam TheWelfareEffectsofStructuralChangeandInternalMigrationinTanzania AkuffoAmankwah,1RichmondAttah-Ankomah,2GoodielCharlesMoshi,3RobSwinkels4 1CorrespondingAuthor–LivingStandardsMeasurementStudy,DevelopmentDataGroup,WorldBank,WashingtonDC,email–aamankwah@worldbank.org 2InstituteofStatistical,SocialandEconomicResearch,UniversityofGhana,Legon,Ghana 3UniversityofDodoma,Tanzania 4PovertyandEquityGlobalPractice,WorldBank,Abidjan,Coted’Ivoire Keywords:structuralchange,internalmigration,welfare,cross-sectorlabormovement,paneldata,Tanzania. WBThematictopics:LaborMobility,InclusiveGrowth. JELCodes:I31,O12,O55,J21,J61. 1.Introduction Thelevelsofeconomicgrowthanddevelopmentobservedacrosscountriesappeartobeinextricablylinkedtothechangesinthestructureofproductionovertimewherethenatureofthischangedeterminesitstransformativeimpactongrowthanddevelopment(McMillanetal,2014;Rodriketal.,2016).Thetransformativeimpactisrealizedwhenthechangesarecharacterizedbyshiftsinoutputandemploymentfromlow-productivityactivitiestohigh-productivityandskill-intensiveactivities(Diao&McMillan,2018).Theexperiencesofcountriesinthedevelopedworldshowthatatransformativestructuralchangetendstofollowacertaintrajectoryinwhichoutputandemploymentfirstshiftfromagriculturetoindustryandthentoservices.However,structuralchangeinmanydevelopingandemergingeconomies,especiallythoseinSub-SaharanAfrica(SSA),hasbeencharacterizedbyaleapfroggingofindustrywithoutputandemploymentshiftingfromagriculturetotheservicesector(whichisoftendominatedbyinformalactivities)aswellasdifferentmigrationandurbanizationpatterns(ChristiaensenandTodo2014;DoroshandThurlow,2017).Consequently,structuralchangeinthesecountrieshasgenerallynotyieldedsignificantbenefitsintermsofgrowthanddevelopment,andinsomecases,ithasratherhurteconomicgrowth(McMillan&Rodrik,2011;McMillanetal,2013;Rodriketal.2016). Theseobserveddifferencesinthepathofstructuralchangebetweendevelopedanddevelopingeconomiesmaybeassociatedwithmanyfactorsthatdrivethenatureofstructuralchange.TheLewistwosectormodelprovidesanimportantinsightintothemechanism(thatis,realwagegapbetweenhighproductivityareaswhichareusuallylocatedinurbanareasandthelowproductivityareaswhichareusuallyfoundinruralareas)bywhichatransformativestructuralchangeoccursandsomeofitskeydrivers(Gollin2014).Thewagegapreflectsproductivitydifferentialsbetweenactivityareas,whichhavebeenfoundtobeanimportantdriverof structuralchangeanditsgrowt