1 of 19

By Mitch Lebouc

Mphil/Phd student in Economics

Supervisors: Dr. T. Ramessur

Dr. V.C. Jaunky

Willingness to Pay for a Tourism Informal Sector Solidarity Fund in Mauritius: A Contingency Valuation Method Approach.�

2 of 19

My Bio data

Name: Mitch Lebouc
Address: Port Louis, Mauritius
Tel: 57788 455
A Brief: Mr Mitch Lebouc is a Business and Economics Educator at College du Saint Esprit. Mitch is a degree holder with honours in Economics with Management, also holder of a Post Graduate Certificate in Higher Education and is an ongoing Mphil/PhD student. His research focuses on informal SMEs in Mauritius.

3 of 19

Table of content

Definition and features of the informal sector.
Recommendations from ILO.
Impact of Covid-19 on Tourism informal sector.
Rationale of case study.
Literature review and research gaps.
Data collection and compilation.
Econometric Modelling: Why the double bounded model?
Description of variables and model estimation with interpretation.
Conclusion and policy implications

4 of 19

What is the informal sector about?�Worldwide definition…

The informal sector is an enterprise-based concept relating to the economic units that are not established in accordance to the labour law and this may include self-employed workers or entrepreneurs with employees (ILO,2020)
According ILO (2020), two billion of the world’s population, that is more than 61 percent of the population work in the informal economy and for the vast majority, the motives to operate informally are lack of formal job opportunities or alternative livelihood options.

The contribution of the informal sector in terms of employment are as follows:

70% of employment in Sub-Saharan Africa

62% of employment in North Africa

What about the economic contribution?

55% of Africa’s GDP is generated by the informal economy

Around 25% of Mauritius GDP is generated by the informal economy

(Source: ILO,2020)

5 of 19

Recommendations from ILO

According to the report of ILO in 2020 entitled ‘COVID-19 crisis and the informal economy: Immediate responses and policy challenges’:

‘One-off payments can be made to large categories of the population, in some cases as a universal benefit paid to the entire resident population those not protected through other mechanisms’.
Food support to those vulnerable groups of the society should be encouraged by government.
Unemployment benefits, universal pensions or social assistance programmes are encouraged.

6 of 19

Impact of COVID-19 on the Tourism informal sector

Since most of the informal economy actors are concentrated in the tourism sector, lockdowns, workplace closures, travel bans and social distancing measures have negatively affected their economic opportunities.
Informal tourism SMEs’ have access to contaminated tourists, live in overcrowded and unhygienic conditions, which may act as a barrier to the precautionary measures implemented by the WHO (ILO, 2020).
In a sample of ten countries with available data, informal employment losses were two to three times larger than job losses among formal employees in mid-2020 and, in contrast to job losses among formal employees, they were not fully reversed by mid-2021 (ILO 2022).

7 of 19

Rationale of the study

The TISSF is a one-off voluntary contribution which will be controlled by the government in order to limit the risk of contagion, access to affordable healthcare, provision of training, income and ensuring food security.
The TISSF definitely satisfies the recommendations of the ILO (2020) by proposing a one-off contribution to support the informal tourism sector.

The research question is based on what are the major determinants that may affect the WTP of individuals for the TISSF in Mauritius

8 of 19

Literature Review/ Research Gaps

Research Gaps: Altruistic behaviour, Trust in government, Planned behaviour, Descriptive norms, Social Desirability Bias

9 of 19

Data Collection and Compilation

A first survey was done with a sample of 100 respondents for an open ended question determining the average WTP.

10 of 19

Econometric Modelling: Why the double bounded model?

The double-bounded dichotomous choice model normally lowers the mean squared error (Alberini, 1995) and yields a more conservative WTP estimate (Banzhaf et al., 2004) by narrowing down the confidence interval around WTP measures.

With reference to Alejandro (2012), the dichotomous choice questions will be used, where a hypothetical scenario is described to the individual and just after, the individual is asked about their willingness to pay a sum of money. For instance: Are you willing to pay Y? Yes or No? For this study, the dichotomous choice approach will be used.

Arrow et al (1993), mention that dichotomous (DC) questions are mostly related to market transactions and are less likely to be sensitive to the characteristics in the questionnaire and are incentive compatible.

In addition, the authors mention that dichotomous questions are also most likely to be preferred in contingent valuation surveys, since they show higher willingness to pay. Normally, WTP DC> WTPOE (Open ended questions)

11 of 19

Description of variables

12 of 19

Model estimation

13 of 19

Model estimation

14 of 19

Interpretation of results

The idea of the hierarchical modeling is to use the data to model the strength of the dependency between the groups. The groups are assumed to be a sample from the underlying population distribution, and the variance of this population distribution, which is estimated from the data, determines how much the parameters of the sampling distribution are shrunk towards the common mean.
The following variables are significant: Planned behaviour, Trust in the government, Altruistic behaviour, Descriptive norms, governmental support and inclusion of informal sector in governmental policies

15 of 19

CONCLUSION

As suggested by ILO (2020), it is high time to start social dialogue in order to capture the best measures for informal operators so as to ensure equitable, effective approaches. The critical situation that the world is facing now offers more opportunity to build trust and strengthen social dialogue with informal operators and institutions.

16 of 19

POLICY IMPLICATIONS

Concerning the governmental support, we can observe that respondents are willing to pay for the TISSF, since they believe that the supports of Rs 5100 was not enough. This may allow the government to consider this one-off voluntary payment as a solution to help the tourism informal sector operators.
We have observed that the respondents do also agree to implement the informal tourism sector issues into local government policies. This is a clear proof that respondents feel that the informal tourism sector plays an important role in the Mauritian economy and that it is high time to consider long-term solutions to support them.

17 of 19