The Bahamas

This Selected Issues paper focuses on labor market challenges in The Bahamas. Self-employment and the use of informal work arrangements in some private jobs, particularly in services sectors and construction, are key sources of labor market challenges in The Bahamas. The analysis documents that while the self-employed are especially exposed to vulnerability and informality, informal work arrangements also affect many dependent private workers. Addressing labor market informality in The Bahamas requires easing supply-side constraints, including barriers to business. A decomposition exercise shows that the negative earnings gap of self-employed with respect to private dependent employees is not fully explained by observable characteristics, suggesting a role for differential returns to skills and other structural barriers. Investing in human capital, through the education and training systems, should also be a priority. Limited training opportunities in relatively unstable jobs may create hurdles for workers to fully develop their potential.