Labor Market Outcomes: Kazakhstan

Public Disclosure Authorized
Jobs
Series
Issue No. 4
Labor Market
Outcomes
Kazakhstan
Victoria Strokova, Angela Elzir and David Margolis
Achievements and Remaining Challenges
1701501_Kazakhstan Labor Market.indd 1 6/2/17 12:07 PM

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“Kazakhstan Labor Market Outcomes: Achievements and Remaining Challenges.” A note prepared for Kazakh-
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Contents
1. Introduction 1
2. Jobs and Productivity 3
3. Demographics and Labor Market Outcomes 7

Employment and Unemployment..................................................................................................................................... 10
Determinants of Activity and Employment Type................................................................................................................ 14
Determinants of Wages................................................................................................................................................... 17
4. Access to Jobs 21
Impact of Labor Markets on Poverty................................................................................................................................. 23
Labor Market Outcomes of the Bottom 40 Percent.......................................................................................................... 25
5. Challenges Ahead and Policy Implications 30
Annex A: Additional Tables and Graphs................................................................................................................. 32

Annex B: Methodology and Additional Results on Informality....................................................................... 42
Annex C: Methodology of the Bottom 40 percent Analysis and Results........................................................ 44
Annex D: Methodology and Results of the Earnings Analysis.......................................................................... 50
References.................................................................................................................................................................... 56
iii

Acknowledgments
This note was prepared by Victoria Strokova (Economist, Jobs Group, co-Task Team Leader), Angela Elzir (Junior Professional
Associate, Jobs Group), and David Margolis (Consultant, Jobs Group), with contributions from Aida Imanbekova (Consul-
tant, Jobs Group), Aizhan Shamurzaeva (Consultant, Jobs Group), Aizhan Imasheva (Consultant, Jobs Group), Chengyan Gu
(Consultant, Jobs Group), Shafique Jamal (Consultant, Jobs Group), and Judy Yang (Economist, Poverty and Equity). Valu-
able comments and guidance were received from Namita Datta (Senior Private Sector Development Specialist, Jobs Group,
co-Task Team Leader) and Thomas Farole (Led Economist, Jobs Group). The note is a product of the Joint Economic Research
Program.
The team worked with close guidance from David Robalino (Practice Manager, Jobs Group) and Naveed Naqvi (Program
Leader, Human Development and Jobs, Central Asia). Peer reviewers were Roberta Gatti (Lead Economist, Social Protection
and Labor), Christos Kostopoulos (Lead Economist, Macroeconomics and Fiscal Management), and Steven R. Dimitriyev
(Lead Private Sector Development Specialist, Trade and Competitiveness).
The work was carried out under strategic guidance from Saroj Kumar (Country Director), Francis Ato Brown (Country Man-
ager, Kazakhstan), and Ludmilla Butenko (Former Country Manager, Kazakhstan).
iv

1. Introduction
This note presents a detailed analysis of jobs in Kazakhstan at the macro and individual levels, including regional
and socio-economic disparities. At the macro level,1 it includes a diagnostic of the links between economic growth, jobs,
and productivity across different economic sectors. At the individual level,2 the analysis focuses on labor market outcomes
of women and men, young and adult workers, residents of urban and rural areas, and people in the bottom 40 percent of
the consumption distribution.3 It also presents a detailed analysis of determinants of employment and wages.
The results show that economic growth over the past decade has led to sustained job creation and rapid
poverty reduction. The country has benefited from the global commodities boom to become one of the top 10 fastest
growing economies in the world, achieving annual real per capita income growth of close to 7 percent. Kazakhstan is also
characterized by strong labor market performance, even during periods of economic slowdown, with high labor force
participation rates, low inactivity, and low unemployment. Increases in real wages have been the main contributors to pov-
erty reduction—from 80 percent in 2001 to 15 percent in 2013 (measured by the PPP-corrected US$5 per capita per day).
Prosperity was also shared over this period since the growth in consumption of the bottom 40 percent of the population
outpaced that of the top 60 percent, resulting in upward mobility and a growing middle class.4
However, the economy remains highly natural resource-dependent and the concentration in capital intensive
sectors means that the impact of growth on jobs remains relatively weak. Despite impressive strides, diversification
remains a challenge for the country, with minerals, oil, and natural gas accounting for 73 percent of exports and 39 percent
of GDP, which has important implications for the number and types of jobs being created. In particular, the dominance of
capital-intensive extractive sectors in economic production has implications for the scale of job creation. As a result, the
impact of growth on jobs remains relatively weak. Between 2003 and 2013, real GDP grew on average by 7 percent per
year while employment expanded only by about 2 percent per year. Furthermore, Kazakhstan faces the same competitive-
ness challenges as other resource rich economies. Some of the labor market outcomes, such as the expansion of employ-
ment in low-productivity non-tradable sectors (construction, services, etc.), can be attributed to the fact that domestic
production of tradable goods remains uncompetitive.
Consequently, even though Kazakhstan experienced productivity-enhancing structural changes, jobs continue
to be concentrated in low productivity activities. The concentration of investments in capital-intensive sectors means
that the impact of growth on jobs remains relatively weak. In fact, while the sector with the largest relative decrease in
employment was agriculture (below average productivity), there was little increase in the share of employment in high
labor productivity sectors (mining and real estate activities). The main contributors to employment growth were low and
below average productivity sectors, such as construction, education, wholesale and retail trade. Despite some reallocation
1
This analysis uses national accounts data and official government statistics on employment and utilizes a recently developed JobStructure tool.
2
This analysis utilizes most recent data for Kazakhstan: the Labor Force Surveys (LFS) for 2010–13 and the Household Budget Surveys (HBS) for
2011–2013.
3
The definition of “bottom 40 percent” (B40) or “top 60 percent” (T60) refers to the distribution of per capita household consumption, in which
individuals are ranked by the expenditure of their household, deflated by regional price indices, based on data available in the 2011, 2012 and 2013
Household Budget Survey. Consumption aggregate used is the one developed by the ECAPOV team.
4
Azevedo, Joao Pedro, Sarosh Sattar, and Judy Yang. (2015). “Kazakhstan Economic Mobility and the Middle Class (2006–2013).” Manuscript in
progress.

of labor in the last decade, a large share of the workforce remains in low productivity employment, particularly in agricul-
ture. Self-employment remains relatively high at almost 30 percent of all employed.5
There are important variations in labor market outcomes and wages across regions and between different
population groups, potentially exacerbated by limited geographic mobility. While there are relatively small differ-
ences in labor force participation rates across regions and different population groups, there are major gaps in access to
different types of employment. Individuals in the bottom 40 percent of the consumption distribution are more likely to live
in lagging (mostly agricultural) regions, are more likely to be unemployed, or work in low productivity jobs, particularly as
self-employed or personal farmstead workers.6 There are also important differentials in wage earnings across sector and
regions, and by educational attainment, age and gender. These large wage differentials, especially across regions and sec-
tors, indicate some constraints to labor mobility. Removing some of these constraints or lowering individual costs of mobility
could help improve access to better jobs.
One of the important factors to ensure access to better jobs among the bottom 40 percent of the population is
education. The education gap between individuals in the bottom 40 and top 60 percent of the consumption distribution
may grow in the future. Although tertiary education has become more prevalent in the population, the gap in educational
attainment between the bottom 40 and top 60 percent has widened in more recent generations. As the older generations
leave the workforce and the younger ones enter, the skills gap is expected to widen. Therefore, improving the educational
attainment and skills of those in the bottom 40 percent could allow them to access higher productivity, better paid jobs.
Improving the relevance and quality of education overall is also needed so new entrants into the labor market can convert
educational attainment into better skills and higher earnings.
Economy-wide institutional reforms continue to be needed to enable private sector job creation and diversifica-
tion.7 While Kazakhstan has made impressive improvements in several areas, it remains critical to continue to improve the
business environment. This includes reforming laws and regulations to address the specific obstacles faced by enterprises in
different sectors; further strengthening the rule of law and improving the quality and effectiveness of service delivery; mak-
ing room for the private sector and encouraging competition; improving the performance of the financial sector; and insti-
tutionalizing a professional and merit-based civil service.8 It is important to note that a comprehensive government reform
program called “100 Steps” was announced in 2015 with the aim to tackle some of these issues.
In addition, Kazakhstan could consider additional regional and sectoral policies targeted to the bottom 40 per-
cent of the population. Broad-based policies that promote investments into the private sector are fundamental, but the
relationship between overall investment and jobs is complex, not always resulting in the types of jobs that may benefit
the bottom 40 percent or create jobs for the older workers or the highly skilled. While the government has been promot-
ing investments in particular sectors, they are primarily targeted at relatively low labor intensity sectors (manufacturing)
or the construction sector which mostly creates temporary jobs. Going forward, in addition to the broad-based reforms,
Kazakhstan could consider more targeted policies that aim to promote jobs for specific population groups in given
regions. These policies would seek to address barriers to job creation in particular sectors and regions and complement
economy-wide policies.
The rest of the note is organized as follows: Section 2 discusses the relationship between economic growth, jobs, and
productivity across different economic sectors. Section 3 discusses demographic trends and overall labor market outcomes.
Section 4 focuses on assessing spatial and sectoral differences in access to jobs, including for those in the bottom 40 per-
cent. Section 5 concludes with a discussion of challenges and broad policy implications.
5
While this share is actually not too high for low and middle income countries, it is almost twice as high as the average of the countries in the
Organization of Economic Development and Cooperation (OECD) (16.8 percent) and is higher than the Europe and Central Asia (ECA) average of
20 percent.
6
Personal farmstead is defined as work on personal plots of land, either for self-consumption or trade/barter, or both, for at least one hour during the
reference week.
7
World Bank. 2013. Beyond Oil : Kazakhstan’s Path to Greater Prosperity through Diversifying, Volume 2. Main report. Washington, DC.
8
Ibid.

2. Jobs and Productivity
Strong economic growth in the past decade has contributed to robust employment gains, although the
employment-growth elasticity has been low by international standards. Between 2003 and 2013, the economy
has added 1.5 million jobs. During this period, real GDP grew on average by 7 percent per year, while employment
expanded by about 2 percent per year (Figure 1). This implies an elasticity of around 0.28, which is lower than the aver-
age for Europe and Central Asia (0.48) and OECD countries (0.5) (Figure 2). In fact, in 2013, employment grew by just
0.7 percent compared to 2012, while GDP grew 6 percent in real terms.
Figure 1 Figure 2
GDP and employment growth, 2003–2013 Employment-growth elasticities, 2003–2013
Employment growth (annual %), 2003–2013
Chile
8%
+" #
Canada
7%
*" #
Australia
, - . /#0123/- . /4#56- 7- 8- 9#" :;#%! ! &<%! $&#66=#
6%
)" # Brazil
5% (" # Kyrgyz Republic

Tajikistan
4%
'"#
Malaysia
3%
&" #
Uzbekistan
2%
%" #
KAZ Armenia
1%
$" #
Korea, Rep.
0%
!" # USA
!" # %" # '"# )" # +" # $! " # $%" # $' " # $) " #
0% 2% 4% 6% 8% 10% 12% 14% 16%
, - . /#>>? #56- 7- 8- 9#" :;#%! ! &<%! $&#66=# Kazakhstan
GDP Growth (annual %), 2003–2013 Azerbaijan
Russia
Source: Authors’ calculations using World Development Indicators.
Turkmenistan
Ukraine
China
Georgia
OECD members
ECA
0.0 0.2 0.4 0.6 0.8 1.0
Growth has been sufficient to create jobs, as the growth of employment was growing at a faster rate than the
growth of the labor force. In the majority of countries, employment has been growing as fast as the labor force (Fig-
ure 3). However, in Kazakhstan, employment growth has been higher (2.1 percent) than the labor force growth (1.7 percent)
between 2003 and 2013. As a result, unemployment has decreased during this period, as discussed in detail later.
Employment gains were driven by the services, construction, trade, and the education sectors. During 2003–2013,
employment expanded in construction (contributing 21 percent of the total increase in employment), wholesale and retail
trade (15 percent), education (18 percent): transportation and warehousing (10 percent), and other services (35 percent).
Employment in manufacturing increased by 15 percent but contributed only 4 percent to employment gains. Employment

Figure 3
Employment and labor force growth, 2003–2013
Labor force growth (annual %), 2003–2013

4.0%
)"!#$
3.5%
("%#$
3.0%
*+,-.$/-.01$2.-345$6+778+9$#:;$'!!(<'!&($
("!#$
2.5%
'"%#$
2.0%
'"!#$
1.5%
&"%#$
KAZ
1.0%
&"!#$
0.5%
!"%#$
0.0%
!"!#$
!"!#$ !"%#$ &"!#$ &"%#$ '"!#$ '"%#$ ("!#$ ("%#$ )"!#$
0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
=-4+9$1>?9-@1A$2.-345$6+778+9$#:;$'!!(<'!&($
3.0% 3.5% 4.0%
Total employed growth (annual %), 2003–2013
in the public administration and social sectors (such as health and education), both of which have a high share of public
employment, contributed almost a third of employment increases during this period. Agriculture was the only sector that
contracted, declining in absolute terms by 14 percent. Overall, reallocation of employment away from agriculture toward
services progressed at a relatively slow pace, while job creation in industry was very low (Figure 4). The sectors with the
highest elasticity of employment to value added during the same period were construction and education; while the lowest
was wholesale and retail trade9 (Figure 5).
Figure 4 Figure 5
Trend in employment by sector, 2003–2013 Employment-growth elasticities by sector, 2003–2013
3.0
Construction
Education
2.5
Transportation, storage and
communications
2.0 Human health and
social work activities
Millions
Manufacturing
1.5
Public administration
and defence
1.0
Mining and quarrying
Wholesale and retail trade

0.5
Agriculture, forestry and fishing
0.0 (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5

03
04
05
06
07
08
09
10
11
12
13
20
20
20
20
20
20
20
20
20
20
20
Source: WEO; Authors’ calculations using data from the Statistical Committee of RK.
Agriculture Mining
Construction Public and social
Other services Manufacturing
Trade
Source: WEO; Authors’ calculations using data from the Statistical Committee of RK.
9
Given increasing output, low employment-growth elasticity could indicate increasing labor productivity, which is discussed next.

Growth in labor productivity has been the main contributor to GDP per capita growth. In Kazakhstan, GDP per
capita grew by 9.1 percent annually between 2003 and 2013. Growing employment and participation contributed posi-
tively, albeit marginally (0.46 and 0.37 percent, respectively), to the growth of per capita GDP. The bulk of the per capita
value added growth came from increases in labor productivity (8.33 percent). The slightly declining share of the working age
population contributed negatively to GDP per capita growth, but by a very small amount (0.06 percent) (Table 1).
Table 1
Decomposition of growth in per capita value added, 2003–2013
Period: 2003 to 2013

% of % Yearly
Total Contribution
Change Change to Growth
Change in per capita
value added 390.74 100.00 9.10
due to changes in
productivity 357.80 91.57 8.33
due to changes in
employment rate 19.70 5.04 0.46
due to changes in
participation rate 15.73 4.03 0.37
due to changes in
share of working age
population –2.49 –0.64 –0.06
Source: Authors’ calculations using JobStructure tool and data from Statistical Committee of RK.
Labor productivity growth has been driven mainly by the wholesale and retail trade as well as the mining sec-
tor. The decomposition of value added per worker changes shows that the majority of labor productivity growth came from
within sectors, such as mining and wholesale and retail trade, which contributed approximately 22 and 23.4 percent, respec-
tively (Table 2). Other activities10 and manufacturing contributed an additional 17.5 and 7.6 percent, respectively. Agriculture
contributed only 4 percent to labor productivity growth. Intersectoral shifts (i.e. changes in productivity due to reallocation
of workers from less to more productive sectors) contributed about one fifth to overall labor productivity growth.
10
Other activities include the following sectors: public administration; education; health, public utilities; finance and insurance; real estate activities;
accommodation and food services; professional, scientific and technical activities; arts, entertainment and recreation; and administrative and support
service activities.

Table 2
Decomposition of value added per worker into sector changes and inter-sectoral shifts
Period: 2003 to 2013

Change % Contribution
Agriculture 19.35 4.01
Mining & Utilities 105.88 21.96
Manufacturing 36.72 7.62
Construction –1.09 –0.23
Wholesale & Retail 112.73 23.38
Transport & Communications 23.32 4.84
Other Activities 84.43 17.51
Not Defined 3.98 0.83
Intersectoral Shift 96.91 20.10
Total change in productivity
(value added per worker) 482.23 100.00
Source: Authors’ calculations using JobStructure tool and data from Statistical Committee of RK.
While Kazakhstan has experienced some productivity-enhancing structural changes, a large share of the popu-
lation continues to be employed in low productivity sectors. Despite a significant reduction in the share of employ-
ment in agriculture (10 percentage points between 2003 and 2013), there are still about 2 million people, or a quarter
of all employed, who remain engaged in this sector. Furthermore, many of the other sectors that increased their share of
employment, such as construction and education, also have below average productivity (Figure 6). As a result, overall labor
productivity remains low, especially for the non-oil sectors, and compared to countries with similar GDP per capita levels.11
Figure 6
Sectors and structural change in Kazakhstan, 2003–13
1.0
Log (sectorial productivity/total productivity), 2013
Real estate activities

0.8
Mining
0.6
0.4 Financial & insurance

Manufacturing
0.2 Transportation & communication
Wholesale & retail trade Other
0.0
–12% –10% –8% –6% –4% –2% 0% 2% 4% 6%
–0.2 Construction
Accommodation & food service Public administration & defence
–0.4
Health & social work
–0.6
Agriculture Education
–0.8
–1.0
Change in employment share, 2003–2013
Note: The size of the bubble represents the sectoral employment shares in 2003.
Source: Authors’ calculations using data from Statistical Committee of RK.
11

3. Demographics and Labor
Market Outcomes
Demographic trends have important implications on the labor market. In Kazakhstan, fertility rates dropped sig-
nificantly in the 1990s and early 2000s. Fertility increased sharply starting in 2005 and peaked in 2010 at 2.5 children per
woman, constituting a short “baby boom” period. Fertility subsequently started to decline and is projected to continue
decreasing to the levels of the early 2000s (2 children per woman). These trends affect the size of the working age popula-
tion and, therefore, of the labor force (Figure 7).
Figure 7
Trend in fertility, population pyramid (2010 and 2050) in Kazakhstan
3.5 2010
100
Total fertility (children per woman)
3 Males Females
90
2.5 80
2 70
60
1.5
50
1 40
30
0.5
20
0
10
1990 2000 2005 2010 2015 2020 2030 2050 2075 2100
0
1000 800 600 400 200 0 200 400 600 800 1000
2050
100
Males Females
90
80
70
60
Age
50
40
30
20
10
0
1000 800 600 400 200 0 200 400 600 800 1000
Source: UN projections.

At the same time, labor force participation rates are already high in Kazakhstan and unlikely to contribute much
more to labor force growth. Almost 78 percent of men and 68 percent of women aged 15+ participate in the labor mar-
ket.12 While women participate less than men, the share of women participating in the labor force is very high by international
standards (Figure 8 and Figure 9). The share of individuals who are not in employment, education or training (NEET) is low
throughout age cohorts, including among youth, with the exception of people aged 60–64 as they retire (Figure 10). The
number of youth entering the labor market increases sharply between the ages of 18–25, after which the activity rate flattens
(Figure 11). Around two-thirds of workers exit the labor market between the ages of 60 and 64. Women tend to exit the labor
force earlier due to lower retirement ages.13
Figure 8 Figure 9
Male labor force participation rates, 2013 Female labor force participation rates, 2013
Moldova Moldova
Belarus Malaysia
Ukraine Mexico
Lithuania Turkmenistan
Latvia Uzbekistan
United States Chile
Estonia Belarus
Azerbaijan Ukraine
Canada Armenia
Russian Federation Latvia
Australia Lithuania
Armenia Kyrgyz Republic
Chile Estonia
Georgia United States
Malaysia Georgia
Uzbekistan Russian Federation
Turkmenistan Australia
Tajikistan Tajikistan
Kazakhstan Canada
China Azerbaijan
Kyrgyz Republic China
Mexico Kazakhstan
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80%
Source: WDI (labor force participation rate, 15+); Statistical Committee of RK. Source: WDI (labor force participation rate, 15+); Statistical Committee
of RK.
12
In 2013, 82.5 percent of men and 75.5 percent of women of working age, defined as those 15–64 years old, were in the labor force.
13
Until recently, retirement ages were 63 years old for men and only 58 for women. However, in 2013 a law was signed gradually increasing the
retirement age for women from the current 58 to 63 years old within a decade.

Figure 10 Figure 11
Status of working age population by age, 2013 School to work transition, 2013
100%
90%
$!!"#
100%
80% 90%,!"#
70% 80%+!"#
60% 70%*!"#
50% 60%)!"#
40% 50%(!"#
30% 40%'!"#
20% 30%&!"#
10% 20%%!"#
0% 10%$!"#
0%!"#
l
4
al
–1
–2
–2
–3
–3
–4
–4
–5
–5
–6
r
$(# 16
15 $)# 17
$*# 18
$+# 19
$,# 20
%!# 21
%$# 22
%%# %&# %'# 25
23 24 %(# 26
%)# %*# %+# 29
27 28 %,# 30
&!#
ve
15
20
25
30
35
40
45
50
55
60
O
Age - Age
. /0123#
Employment Unemployment Inactivity NEET Employment Unemployment Inactivity

4156378# 98/01:.3578# ;81<3=>578#
Source: Authors’ calculations using LFS 2013. Source: Authors’ calculations using LFS 2013.
Due to the fall in fertility in the 1990s and constant participation rates, the growth of the labor force in the next
few years is expected to be much slower. Kazakhstan will experience a relatively slow growth in the labor force14 in
the next few years (Figure 12). In fact, while the labor force grew by 1.5 percent annually in 2003–2010, it is projected to
increase only by 0.5 percent annually in 2015–2020, which means that it will increase by less than 60,000 persons per year.
As a result, the pressure on the labor market may be reduced in the short run.15 The growth rate of the labor force will peak
around 2030 when the “baby boom” generation enters the labor market (Figure 12). This will mean that annually, the labor
force will grow by as many as 135,000 people, requiring a much faster job creation pace during that period.
Figure 12
Projected labor force growth, 2010–2050
160,000 4,500
140,000 4,000
3,500
Thousands
120,000
3,000
100,000
2,500
80,000
2,000
60,000 1,500
40,000 1,000
20,000 500
– 0
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
y/y LF increase, left axis Cumulative LF increase, right axis
Note: For working age population of 16+, assuming 72 percent labor force participation rate.
Source: Demographics projections and trends in working age population and labor force are based on the Statistical Committee of RK.
14
Assuming constant labor force participation rate of 72 percent.
15
Assuming the current deterioration of the economic situation does not lead to a significant drop in job creation and a spike in unemployment. So far
the impact of the crisis on the labor market has been limited (World Bank Biannual Economic Update, 2015), but simulations presented later in the
note indicate that unemployment may increase somewhat by 2020 should current economic trends persist.

External migration flows remain relatively low, especially in comparison to the 1990s. Compared to the 1990s,
migration flows have decreased dramatically in Kazakhstan. Estimates for official inflows and outflows are less than
30,000 persons per year, even though unofficial migration could be higher. It should be noted that during this period
Kazakhstan has been actively pursuing a policy of encouraging repatriation of ethnic Kazakhs living abroad. Almost a
million (944,500) ethnic Kazakhs immigrated to Kazakhstan during 1991–2013, which helped to smooth the decrease in
the demographic growth observed in the country in the 1990s.16 While migration trends may change in the future,17 the
impact of external migration on the labor market remains relatively low (Figure 13).
Figure 13
Official migration flows in Kazakhstan, 1991–2013
500
400 477.1
Thousands of persons
300
299.5
200
100
70.4
38.1 24.4
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Emigrants Immigrants
Source: Economic Research Institute.
Employment and Unemployment

Employment rates have been traditionally high in Kazakhstan, especially for women, and unemployment has
been declining steadily. The employment rate18 was 75 percent for men and 63 percent for women in 2013, which are
very high levels by international standards.19 Employment rates are slightly higher in rural areas (Figure 14). As a result of the
rapid growth in the number of jobs, the unemployment rate was halved between 2001 and 2013, from 10.4 to 5.2 percent
(Figure 15). Long-term unemployment remains very low. The unemployment rate is slightly higher among women (5.9 per-
cent compared to 4.6 percent among men) and urban areas (5.4 percent vis-a-vis 4.9 percent in rural areas) (Figure 14). The
recent economic slowdown has not yet affected employment in any significant way, with the unemployment rate holding
steady at 5 percent in the first quarter of 2015.20
16
Source: Economic Research Institute.
17
For instance, a slowdown in neighboring countries may increase the number of labor migrants coming to Kazakhstan.
18
Calculated as the number of employed divided by the number of working age population (15+).
19
Figure 44 in Annex A.
20
Data from the Statistical Committee of RK for Q1 of 2015.
10

Figure 14 Figure 15
Labor force status in working age population, 2013 Unemployment rates, 2001–2013
100% 25%
90% 20%
80% 15%
70%
10%
60%
5%
50%
0%
40%
01
02
03
04
05
06
07
08
09
10
11
12
13
30%
20
20
20
20
20
20
20
20
20
20
20
20
20
20%
10% Unemployment rate, %
0% Youth unemployment rate, % (15–24 years)
Overall Male Female Urban Rural Long- term unemployment, %
Employment Unemployment Inactive Source: Statistical Committee of RK.
Note: Working age = 15–64 years of age.
Source: Authors’ calculations using LFS 2013.
While unemployment among 15–24 year olds decreased dramatically, younger people (aged 25–34) do have
somewhat higher unemployment rates. Youth unemployment fell drastically from almost 20 percent in 2001 to just
under 4 percent in 2013, which can be attributed in large part to increasing enrollment in tertiary education.21 However,
younger people aged 25–29 and 30–34 do have somewhat higher unemployment rates (approximately 7 percent compared
to a national average of 5 percent) (Figure 16). Even controlling for other characteristics, this age group is more likely to be
unemployed. Similarly, unemployment is slightly less likely among males and the more educated (those with upper second-
ary and tertiary education) (Table 5 in Annex A). Those living in urban areas are also slightly less likely to be unemployed.
Figure 16
Unemployment rates by age, 2013
8%
7%
6%
5%
4%
3%
2%
1%
0%
9
4
–1
–2
–2
–3
–3
–4
–4
–5
–5
–6
15
20
25
30
35
40
45
50
55
60
21
Tertiary enrollment (gross) increased from 29 percent in 2000 to 45 percent in 2012 (WDI).
11

While the majority of workers are wage employees, self-employment still remains relatively high. Although there
has been a gradual shift from self-employment toward wage employment, the share of self-employment remains high at
29 percent of the employed (Figure 17) and more than half of them (52.5 percent) are working in agriculture. In contrast, the
share of self-employed is about 20 percent in ECA countries and 16.8 percent among OECD countries.22 Wage employment
has increased from about 61 percent of total employment in 2003 to about 66 percent in 2013, mirrored by a decrease in the
number of self-employed. Wage employment is significantly lower in rural areas (55 percent). Most of the difference in employ-
ment between rural and urban areas is due to personal farmstead employment,23 although own-account workers and employ-
ers are also relatively more frequent in rural areas. The share of public employment24 among wage employees is also high—at
42.3 percent—reflecting the big role, albeit decreasing,25 that the state continues to play as an employer.
Figure 17
Overview of the working age population in Kazakhstan, 2013
Public
2.5m; 42.3%
Wage Employee Informal:

5.9m; 65.8% 14.4%
Active Private
9.0m; 72.1% 3.4m; 57.7%
Unemployed Formal:
0.5m; 5.2% 85.6%
Working Age
Agriculture
Population (15+)
1.4m; 52.6%
12.5m; 74.4%
Self-Employed
2.6m; 29.0%
Inactive Non-Agriculture
3.5m; 27.9% 1.2m; 47.4%
Note: Self-employed include own-account workers, employers, farmstead workers, members of cooperatives and unpaid family workers.
Wage employment is high in almost all sectors, except agriculture and trade. Wage employment is nearly universal in mining,
manufacturing, public administration, public utilities, and other services. Self-employment is more prevalent in retail and wholesale
trade (commerce), construction, transport and communications, and agriculture (Figure 18).
22
Source: WDI (ECA) and OECD (https://data.oecd.org/emp/self-employment-rate.htm), respectively.
23
Defined as those who have worked on their personal farmstead for at least one hour during the reference week.
24
Defined as those wage employees reporting state ownership of the organization they work in.
25
Analysis of HBS data shows that the share of public employment in total wage employment decreased by almost 10 percentage points from 2006 to
2013.
12

Figure 18
Distribution of employment by type and sector in Kazakhstan, 2013
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
re
es
ce
te
s
m
tie
ice
rin
tio
tio
tu
iv
ta
er
m
ili
rv
ct
tu
uc
es
ra
ul
co
ut
ra
se
ric
ist
ac
tr
l
d
a
t
ic
ns
Co
er
ex
uf
in
Ag
re
n
bl
ta
Co
th
m
an
d
d
Pu
ad
O
an
an
or
M
sp
ic
e
g
nc
an
bl
in
Pu
in
ra
Tr
M
su
in
e,
nc
na
Fi
Wage employment Own-account self-employed
Employer Farmstead worker
Note: Excluding unpaid family workers, which represent 1 percent of employed in agriculture and less than 1 percent in other sectors.
The majority of self-employed in agriculture work on personal farmsteads, while self-employed in non-agriculture
are mostly own-account workers. Almost two-thirds (64 percent) of self-employed in agriculture are those who work on per-
sonal farmsteads. Only about 30 percent are own-account workers, while the rest are split among employers (4 percent), unpaid
family workers (1.5 percent), and cooperative members (0.5 percent). Among self-employed in non-agricultural activities,
90 percent are own-account workers and another 8.5 percent are employers. Only a very small share are unpaid family workers
(1 percent) and members of cooperatives (0.5 percent).
Informality is concentrated in self-employment, particularly in agriculture. A relatively small share (only 8.3 per-
cent) of wage employees are informal, but over two-thirds of agricultural self-employment (which is largely personal
farmstead work, as noted above) is informal26 (Table 3 and Annex 2). Very few employers are informal (only 3.4 per-
cent), while about one fifth (18 percent) of non-agricultural self-employed are informal. However, it should be noted
that measurement of informality for self-employment is somewhat less reliable.27 Due to this measurement issue
and prominence of wage employment in Kazakhstan, this note primarily focuses on informal wage employment.
26
For wage employment, this note adopts a broad definition of informality based on two standard questions. First, a wage worker is considered
informal if he or she does not have a written contract. Wage workers are also considered informal if their employer does not contribute to social
insurance/the pension fund on their behalf. All unpaid family workers, cooperative members and personal farmstead workers are considered informal,
and among the self-employed (employers or own-account workers), those whose enterprise is not registered are considered informal.
27
The question on registration changed in 2012 to make it applicable to all employment categories, whereas it previously applied only to the self-
employed. As a result, the LFS shows a significant difference in the share of formal self-employed between 2011 and 2012.
13

Table 3
Distribution of informality by job type, 2013
Share of Share of Percent

Type of Employment28 Employed Total Informal
Public Wage Employment 29.35 42.30 0
Private Formal Wage
Employment 34.27 49.40 0
Private Informal Wage
Employment 5.76 8.30 100
Agricultural Self
Employment 16.11 52.61 69.31
Personal Farmstead 10.46 34.15 100
Non-Agricultural Employer 1.23 4.03 3.36
Non-Agricultural Self
Employment 13.28 43.36 18.17
28
Determinants of Activity and Employment Type

Men and the more educated are more likely to participate in the labor market. Controlling for a set of characteristics,29
men are 10 percentage points more likely to be active than females. Besides gender, education plays a big role, with those
with upper secondary and tertiary education being 17.7 and 15.6 percentage points, respectively, more likely to be active
than those with lower secondary or less. Age is related to activity in a predictable manner: 15–19 year olds, who are over-
whelmingly in school, are less likely to be active (by 15 percentage points), as well as those aged 55 and above, particularly
those 60 years and older, who are 70 percentage points more likely to be inactive compared to 25–29 year olds. There are
also some regional differences, with those in Astana particularly less likely to be active compared to the Akmola region, and
those in urban areas are only slightly more likely to be inactive than those in rural areas (Table 5 in Annex A).
Those who are more likely to secure public wage employment compared to private formal employment appear
to be different in several respects. Keeping other characteristics constant, males are significantly more likely to be
employed in formal private sector jobs compared to women, who are more likely to work in the public sector (Figure
19). Younger people (20–24 years old) are more likely to work in the private sector even compared to a relatively young
cohort of 25–29 year olds. On the other hand, older people (40 and above) are much more likely to be in the public wage
employment. While higher levels of education increase the probability of both public and private wage employment com-
pared to lower secondary education, the effect is most dramatic for those with tertiary education, who are 31 percentage
points more likely to be in the public sector. On the other hand, those with upper secondary education are much more
likely to be in the private formal sector than those with lower secondary. There are also significant regional differences;
however, while those in urban areas are more likely to be in the private formal sector compared to those in rural areas, this
is not the case for the public sector, where there are no statistically significant differences between rural and urban areas.
28
Due to changes in the LFS questionnaire, the classification of public and private formal sector employment shifted between 2011 and 2012, so
most of the analysis that distinguishes between these two types of formal employment focuses on 2013 only. Shares of employment by public/
private among formal workers: 2010 = 32.8 percent/58.3 percent; 2011 = 33.0 percent/58.8 percent; 2012 = 42.6 percent/48.4 percent; 2013 =
42.3 percent/49.4 percent.
29
Multinomial logits estimated on the following outcomes: NEET (Not in Employment, Education or Training), in school or training, unemployment,
farmstead worker, non-agricultural self-employed, public wage employment and private formal wage employment. Reference categories include
female, 25–29 years old, lower secondary or less, rural resident, in Akmola region, and single person household. Informal wage employment and its
determinants are considered separately.
14

Figure 19
Marginal effects for multinomial logit model, 2013
Urban
Almaty City
East Kazakhstan
Pavlodar
South Kazakhstan
Mangystau
Kyzylorda
Kostanay
Karaganda
Jambyl
Atyrau
Aktobe
Tertiary education
Upper secondary education
60–64 Years old
50–54 Years old
45–49 Years old
40–44 Years old
20–24 Years old
Male
–40.00 –30.00 –20.00 –10.00 0.00 10.00 20.00 30.00 40.00
Private formal wage employment Public wage employment
Interpretation: A male has 11.4 percentage points higher chance of having private formal wage employment than a female when both have the average characteristics of the
working age population (15–64 years old).
Note: Only coefficients significant for both public wage employment and private formal wage employment are included, with the exception of urban which is only significant
for private formal wage employment. Reference categories include female, 25–29 years old, lower secondary or less, rural resident, in Akmola region, and single person
household.
Determinants of self-employment in agriculture and non-agriculture differ, but younger people tend to be more
likely to engage in both. Not surprisingly, residents of urban areas are considerably less likely to be in agricultural self-
employment while location (urban-rural) does not make a difference for non-agricultural self-employment (Figure 20).
Younger workers (15–19 and 20–24 years old) are more likely to be self-employed in agriculture compared to 25–29 year
olds, but the number of such workers is very small.30 Younger people are also more likely to engage in non-agricultural self-
employment, but there are also relatively few of them.31 Older workers, on the other hand, especially those over 60 years of
age, are significantly less likely to be self-employed in non-agriculture than prime-age workers (25–29 year olds). Workers
with tertiary education are less likely to be self-employed compared to those with lower secondary or less, especially outside
of agriculture.
30
Approximately 16 percent of all self-employed in agriculture or about 232,000 workers.
31
Only 13 percent of all self-employed outside of agriculture or about 172,500 workers.
15

Figure 20
Urban
Almaty City
East Kazakhstan
Pavlodar
South Kazakhstan
Mangystau
Kyzylorda
Kostanay
Karaganda
Atyrau
Aktobe
Tertiary education
60–64 Years old
45–49 Years old
40–44 Years old
20–24 Years old
15–19 Years old
Male
–15.00 –10.00 –5.00 0.00 5.00 10.00
Self-employment in agriculture Self-employment outside of agriculture
Interpretation: A male has 3.75 percentage points higher chance of being self-employed outside of agriculture than a female when both have the average characteristics of
the working age population (15–64 years old).
Note: Only coefficients significant for both self-employed in agriculture and non-agriculture are included. Reference categories include female, 25–29 years old, lower
secondary education or less, rural resident, in Akmola region, and single person household.
Informal wage workers tend to be younger, less educated and more likely to be found in rural areas than for-
mal private wage workers. Informal wage workers start working younger, and nearly a third of all informal workers are
under the age of 30 (Figure 21). In addition, only 13.5 percent of informal wage workers have a tertiary education, relative
to 34.9 percent for formal wage workers (and 52.5 percent for public sector workers) (Table 6 in Annex B). Informal work-
ers also drop out of education earlier. Less than half (46.4 percent) of informal wage workers live in urban areas, against
61.7 percent of public sector and 69.6 percent of formal private wage workers. On the other hand, very few people work
in the public sector at young ages.
16

Figure 21
Age distribution by formality status
20%
Share of workers
15%
10%
5%
0%
4
–1
–2
–2
–3
–3
–4
–4
–5
–5
–6
15
20
25
30
35
40
45
50
55
60
Age group
Public wage workers Private formal wage workers
Private informal wage workers
Sector and location appear to play a large role for informality. Detailed statistical analysis32 shows that while certain
determinants of informal status are very strong (there is almost no informal wage employment in mining, health and social
services, education and public administration services, for example), other effects are less clear. For example, informality
in agriculture is significantly higher than in other sectors with the exception of commerce, while informality is significantly
lower in Astana and Almaty cities. However, outside of agriculture and the main cities, a wage worker is no more likely to
be informal in rural areas than in urban areas. Similarly, the apparent differences in formality related to education levels
appear to be largely due to the fact that the more educated workers are more likely to work in low-informality sectors
and low-informality regions. Thus, it seems that people with an upper secondary education degree are more likely to be
informal than those with a lower educational attainment, but these workers are also more likely to be wage employees.
The combination of these factors implies that the level of educational attainment actually does not play a significant role
in explaining formality among those who have wage jobs (Table 7 in Annex B).
Determinants of Wages
Similar to many other countries, an analysis of wages33 in Kazakhstan reveals a large gender gap and significant
wage differentials by age (Annex 4). Men tend to earn more than women with identical characteristics; wages for men
were 27–31 percent higher than for women over the 2011–2013 period. These estimates control for sector of work and
worker characteristics so these wage gaps do not result from the fact that women are less likely to work in high-paying sec-
tors such as mining, manufacturing or transportation, and are more likely to work in low paying sectors like commerce and
other services (especially the education and health and social services sectors). They also do not reflect education differentials
32
See Annex B for more information about the methodology.
33
The analysis in this section exploits data from the 2011–2013 Household Budget Surveys to estimate the determinants of wages, overall and on a
sector-specific basis. It then uses the 2011–2013 Labor Force Surveys to estimate how much individuals with different skill levels could expect to
earn in different regions, and compares this to the actual distribution of employment of these skill levels in the different regions. In the absence of
constraints, one should see a higher concentration of skills in the regions where these skills are the most highly rewarded; any deviation from this
distribution is indicative of constraints to labor reallocation (see Annex D for more details on the methodology).
17

or disproportionate work in rural areas.34 Holding these characteristics constant, women are paid less than men suggest-
ing that there are other factors contributing to the gender wage gap. There are also significant wage differentials by age.
Wages in Kazakhstan increase with age up to around 45 years of age, after which they tend to decline. This trend has been
strengthening in recent years (Figure 22). This age profile of wages is also typical of most countries, as it reflects the process
of skills accumulation, depreciation and selection into and out of the labor market.
Figure 22
Wage differentials (relative to 15–19 year olds) by age group, 2011–2013
40%
30%
20%
10%
0%
9
4
–1
–2
–2
–3
–3
–4
–4
–5
–5
–6
15
20
25
30
35
40
45
50
55
60
2011 2012 2013
Source: Authors’ calculations using 2013 HBS.
Additional skills—in the form of education—bring a wage premium, particularly for those with tertiary educa-
tion. The estimated wage premium is 7–12 percent for an upper secondary education and 39–48 percent for a tertiary
education (both relative to a lower secondary education or less).35 These estimates suggest that employers do value an
upper secondary education more highly than simply a lower secondary education or less, but not by much. However, there
is a significant premium in wages that comes with having a tertiary education. The lack of a significant premium for upper
secondary education may be related to the low quality of education at secondary and upper secondary levels. At the inter-
national level, despite high levels of enrollment and completion of secondary education, Kazakhstan fares poorly in educa-
tion quality, as reflected in the poor, though markedly improved, performance on international student assessments,36 such
as the OECD’s Programme for International Student Assessment (PISA). The 2012 PISA results suggested that Kazakhstani
students underperformed compared to their peers in comparator countries in reading, mathematics and science (Figure 67
in Annex A).
Not surprisingly, different sectors of the economy pay different wages, even after controlling for worker characteris-
tics (Figure 23).37 The mining and extractive industries sector pays the most on average, with its workers earning wages between
78 and 84 percent above what similar wage workers earn in agriculture in the same year.38 Manufacturing, transportation and
communication, and finance, insurance and real estate are also relatively high paying sectors, while wage workers in agriculture,
other services, and commerce earn the least. Not only do different sectors pay similar workers different amounts, they reward the
same characteristics differently as well (Table 11 in Annex 4). Returns to skills, age, residing in an urban area or gender can vary
34
In fact, women make up a larger share of tertiary educated wage workers (56 percent) and slightly more than half of urban wage workers
(51 percent), while men occupy 53 percent of wage jobs in rural areas.
35
Estimates from 2011–2013. See Table 11 in Annex D for results for 2013.
36
Kazakhstan’s performance on PISA improved markedly since 2009, especially in math and science and also among the lowest achievers, but its overall
achievement remains significantly behind other countries with similar income per capita levels.
37
Without controlling for other characteristics, the variation in wages within a sector can be quite large, although the ranking of sectors discussed here
holds on average.
38
There are few consistent trends over the 2011–2013 period, although wage gaps appear to be shrinking somewhat in finance, insurance and real
estate, transportation and communication, and public administration services.
18

Figure 23
Trends in relative wages across sectors (relative to agriculture), 2011–2013
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
g
ce
s
tie
ce
ce
ice
at
in
rin
io
tio
tio
er
vi
vi
in
st
ili
rv
tu
uc
ica
ca
m
er
er
e
M
ut
se
m
ac
u
tr
al
ls
un
Ed
ns
Co
ic
er
uf
re
cia
m
tio
bl
Co
th
an
d
m
Pu
so
ra
O
an
M
co
ist
d
an
e
d
in
nc
an
th
ra
ad
n
al
su
tio
He
in
ic
ta
bl
e,
or
Pu
nc
sp
na
an
Fi
Tr
2011 2012 2013
Source: Authors’ calculations using 2013 HBS.
dramatically across different industries. For example, gains to having a tertiary education degree range from 12 percent above a
lower secondary education degree in the agriculture sector to 58 percent higher in manufacturing.
There are also significant regional and urban-rural wage differentials, mainly explained by the economic sec-
tors prevalent in different parts of the country. In fact, urban residents earn 16–18 percent more than rural residents.
Such rural-urban wage differentials are common around the world and reflect a higher level of labor demand in urban areas
(Table 11 in Annex D). In terms of regional wage variation, the same worker earns 51 percent more than the national aver-
age in Mangystau and 9 percent less than the national average in North Kazakhstan (Figure 24), and these premia do not
simply serve to cover differences in cost of living. Such large wage differences across sector and location of employment,
controlling for worker characteristics, imply that there may be barriers to mobility which would allow workers to move
where they can obtain higher paid jobs given the skills they have. Labor mobility is known to be low in Kazakhstan,39 while
constraints to mobility could be cultural (desire to stay near the historic family residence), financial (not enough money to
pay for a move or to acquire housing in the new location) or informational (not knowing where the high paying jobs are
located).
Finally, while the public sector commands only a slight wage premium, it attracts a very high share of the ter-
tiary educated. As was shown earlier, those with tertiary education are much more likely to work in the public sector com-
pared to those with lower secondary education. In fact, half of those working in public wage employment have completed
tertiary education compared to only 30 percent for private formal wage employment and just 10 percent of private non-
formal wage employment.40 However, on aggregate, controlling for employee characteristics the public sector enjoys only a
39
Arias, Omar S.; Sanchez-Paramo, Carolina; Davalos, Maria E.; Santos, Indhira; Tiongson, Erwin R.; Gruen, Carola; de Andrade Falcao, Natasha;
Saiovici, Gady; Cancho, Cesar A. 2014. Back to work: growing with jobs in Europe and Central Asia. Europe and Central Asia Reports. Washington,
DC: World Bank Group.
40
Based on LFS 2013.
19

Figure 24
Wage differentials and cost of living (relative to Akmola) by region, 2013
51%
43%
28%
25%
15% 13%
11% 10%
6% 7% 8% 6% 7%
5% 5% 4%
2%
0% 0% –1%
–2% –2%
–4% –5% –5% –6% –4%
–7% –8% –9%
be
au
an
ay
an
ar
an
an
ty
ty
by
at
nd
rd
ta
Ci
Ci
od
an
to
yr
st
st
st
m
m
hs
lo
s
ga
gy
kh
kh
kh
At
na
y
Ak
vl
st
Ja
Al
zy
ak
at
ra
Pa
Ko
an
za
za
za
ta
Ky
m
az
Ka
Ka
Ka
Ka
As
M
Al
tK
st
es
ut
rt
Ea
W
No
So
Wages Cost of living
Note: The effects pictured are drawn from the overall regression, in which sectors are controlled for with a set of indicator variables, and not the sector specific regressions.
Thus, this specification imposes the same differentials for all sectors.
2 percent wage premium compared to the private sector (Table 11 in Annex D). Returns to higher education are high in some
sectors with a large share of public employment, such as education (Table 12 in Annex D), but wages in those sectors tend
to be on the lower side overall. Hence, wage differentials do not fully explain the appeal of the public sector. Public sector
employment is likely to be associated with other benefits (such as better social benefits or social prestige, etc.) that make it
particularly attractive to the well-educated.
20

4. Access to Jobs
There are relatively small differences in labor force participation rates across regions, even when taking into
account the gender dimension. The differences in participation rates and unemployment rates are not large in Kazakhstan,
even between men and women (Figure 25 and Figure 26). The regions with the lowest participation rates are Almaty City
and East Kazakhstan, at around 65 percent each, while the regions with the highest rates are Akmola and Zhambyl, at almost
80 percent. Similarly, female labor force participation rates are highest and lowest in those four regions.
Figure 25 Figure 26
Working age population by region, 2013 Labor force participation rates by gender and region, 2013
100%
80%
80%
60%
60%
40%
40%
20%
20%
0% 0%
Almaty
Akmola
Aktobe
Atyrau
East. Kaz.
Mangystau
North Kaz.
Pavlodar
Karagandy
Kostanay
Kyzylorda
South Kaz.
West Kaz.
Zhambyl
Astana City
Almaty City
Akmola
Aktobe
Almaty
Atyrau
West Kaz.
Jambyl
Karaganda
Kostanay
Kyzylorda
Mangystau
South Kaz.
Pavlodar
North Kaz.
East Kaz.
Astana City
Almaty City
Male Female Total population

Employed Unemployed Not in a labor force
Note: Working age population = 15–64 years old. Note: Working age population = 15–64 years old.
Source: Authors’ calculations using 2013 LFS. Source: Authors’ calculations using 2013 LFS.
However, the types of employment differ substantially across regions and are largely dependent on the eco-
nomic sectors prevalent in different parts of the country (Figure 27 and Figure 28). Regions that are relatively special-
ized in mining and extractive industries (Mangystau, Atyrau, Karaganda), as well as the cities of Almaty and Astana, have
particularly high concentrations of wage employment, while agriculture-intensive areas like North Kazakhstan, Zhambyl and
Kostanay had high shares of self-employed working in agriculture, including farmstead workers.
21

Figure 27 Figure 28
Employment type by region, 2013 Employment by sector and region, 2013
100% 100%
80% 80%
60% 60%
40% 40%
20% 20%
0% 0%
Ak ty
Ak la
At e
u
gy .
u
v z.
ra ar
Ko ndy
zy y
ut da
tK .
Zh az.
na l
at ty
ty
z
W Kaz
Ak la
Al e
At y
W yrau
Ja z.
ga l
Ko nda
zy y
an da
.
rt ar
.
.
y
ty
Ky na
b
Pa az
Ea Kaz
z
a
No sta
M t Ka
Ka
As mb
at
Ky ana
t
o
b
a
i
Ci
So ysta
Ka lod
a
Ka mb
As t Ka
o
to
yr
i
Ci
No lod
m
to
M lor
Al a C
lo
tK
K
a
ga
m
y
st
h
a
Al
y
st
h
Ak
s
es
at
rt
n
Pa
es
s
Ea
an
ut
ta
ra
m
ta
m
So
Al
Wage formal public Wage formal private Services Agriculture
Wage informal Self-employed agriculture
Mining, manufacturing and construction
Self-employed non-agriculture
Informal wage employment is much more prevalent in South Kazakhstan and in the agriculture, commerce and
other services sectors. The South Kazakhstan region has the largest share of informal wage workers (almost a third), by a
significant margin, while Astana and Almaty cities have a high share of formal workers (Figure 29). Informal wage workers
are employed primarily in the agriculture, commerce and other services sectors. In contrast, public employment is largely
concentrated in education, health and social services and public administration (Figure 30). Formal private wage work, on
the other hand, is not dominated by any particular sector.
Figure 29
Wage employment types within region, 2013
NORTH
KAZAKHSTAN
PAV L O D A R
AKMOLA
KOSTANAI
WEST Astana
KAZAKHSTAN EAST
K A Z A K H S TA N
AKTOBE
ATYRAU
KARAGHANDY
ALMATY Budget, Performance Review

& Strategic Planning
KYZYLORDA General Services
IB
MANGYSTAU Printing & Multimedia
ZHAMBYL This map was produ

The boundaries, colo
shown on this map d
Group, any judgmen
SOUTH endorsement or acce
KAZAKHSTAN
Public Wage Employment

Private Formal Wage Employment
Private Informal Wage Employment
Note: Green = public wage employment; dark blue = private formal wage employment; light blue = private informal wage employment. Cities of Astana and Almaty excluded.
Their shares of public wage employment, private formal wage employment and private informal wage employment are as follows: Astana (42 percent, 55 percent, 3 percent)
and Almaty (41 percent, 54 percent, 5 percent).
22

Figure 30
Sectors by formality status, 2013
100%
80%
60%
40%
20%
0%
Public wage Private formal Private informal
workers wage workers wage workers
Other services Commerce

Finance, insurance & real estate Construction
Transport & communication Manufacturing
Public administration, utilities & social sectors
Note: Social sectors include education, health and social services.
Impact of Labor Markets on Poverty

Over the period 2006–2013, labor incomes contributed a large share to the decline in Kazakhstan’s poverty
rate.41 Extreme poverty levels are now very low in Kazakhstan,42 and the share of the population living in poverty went
down from 80 percent in 2001 to 15 percent in 2013, as measured by the PPP-corrected US$5 per capita per day.43 The
main sources of observed poverty reduction were wage earnings and, to some extent, pensions (Figure 31). Consistent with
the considerable contribution of earnings to poverty reduction in 2006–2007 (6.8 percentage points), real wages increased
significantly during this period but dropped in 2008 during the economic crisis (Figure 32). Wage growth rebounded quickly
after 2008, but at a significantly lower rate, thus contributing to a lesser extent to poverty reduction. Still, wages contributed
4.8 percentage points to the decrease in the poverty rate over the 2012–2013 period. Growth in consumption of the bottom
40 percent of the population outpaced that of the top 60 percent, resulting in increased upward mobility. As a result, the
size of the middle class more than doubled between 2006 and 2013 (Azevedo, Sattar and Yang, 2015).
Continued poverty reduction will depend on wage increases, but recent wage growth has been outpacing labor
productivity. Overall productivity growth over the past decade has been lower than wage increases, even at the sectoral
levels (Figure 33 and Figure 34). In the period 2004–08, wage growth (9 percent annually) outstripped labor productiv-
ity growth (5 percent annually) to some extent. However, after 2008, productivity growth stagnated (1 percent annually),
but robust wage growth continued (7 percent annually). The sectors with the highest increases in wages are mainly low-
productivity sectors (health & social services, education, public administration). In high productivity sectors (mining, real
estate transactions, financial and insurance activities), productivity has fallen in recent years while wages have continued to
increase (Figure 33). Although growth in wages has contributed to poverty reduction and shared prosperity, the growing gap
between labor productivity and wages raises concerns over competitiveness and sustainability.
41
Azevedo, Joao Pedro, Sarosh Sattar, and Judy Yang. (2015). “Kazakhstan Economic Mobility and the Middle Class (2006–2013).” Manuscript in
progress.
42
The extreme poverty line is $1.25/day PPP per person.
43
World Bank’s cross-country poverty lines for ECA countries include PPP-corrected US$5 per capita per day (ECAPOV).
23

Figure 31 Figure 32
Contribution to poverty reduction Year to year change in real monthly wage index (2003 = 100)
4.0 18%
2.0
16%
(difference, percentage points)
0.0
Poverty Rates ($5/day)
–2.0 14%
–4.0 12%
–6.0
10%
–8.0
–10.0 8%
–12.0
4%
–14.0
2%
7
3
00
00
00
01
01
01
01
–2
–2
–2
–2
–2
–2
–2
06
07
08
09
10
11
12
0%
20
20
20
20
20
20
20
Shares of Adults Share Employed Wages –2%
04
05
06
07
08
09
10
11
12
13
Social Assistance Pension Agriculture
20
20
20
20
20
20
20
20
20
20
Other Income
Source: Azevedo, Joao Pedro, Sarosh Sattar, and Judy Yang. (2015). “Kazakhstan
Source: Azevedo, Joao Pedro, Sarosh Sattar, and Judy Yang. (2015). “Kazakhstan Economic Mobility and the Middle Class (2006–2013).” Manuscript in progress.
Economic Mobility and the Middle Class (2006–2013)”. Manuscript in progress.
Figure 33 Figure 34
Trends in real wages and labor productivity index, 2004 = 100 Growth in real wages and labor productivity index, 2004–2013
280 20%
260 15%
240 10%
220 5%
200
0%
180
–5%
160
–10%
140
–15%
120
re
es
ns
se
es
ad
in
rin
tio
io
tu
iti
en
ic
tio
100
ry
at
rv
tr
u
uc
tiv
ul
f
ac
ar
uc
t
de
se
il
ic
ac
tr
ac
s
qu
ta
80
Ed
gr
an
ns
al
uf
d
re
e
A
an
ci
Co
d
tr
an
nc
so
an
60
ra
n
M
an
at
tio
d
g
su
an
t
in
le
es
in
ra
40
in
sa
lth
ist
al
nd
M
le
Re
in
ea
ho
la
20
m
H
W
ia
ad
nc
ic
0
na
bl
Fi
Pu
04
05
06
07
08
09
10
11
12
13
20
20
20
20
20
20
20
20
20
20
Productivity growth, 2004–2008 Wage growth, 2004–2008

Productivity growth, 2008–2013 Wage growth, 2008–2013
Real monthly wages index, 2004 = 100
Real VA per worker index, 2004 = 100 Note: Labor productivity is measured by real value added per worker.
Note: VA = value added. Source: Authors’ calculations using Statistical Committee of RK.
Source: Authors’ calculations using Statistical Committee of RK.
24

Labor Market Outcomes of the Bottom 40 Percent 44
Two thirds of household incomes in Kazakhstan comes from wages, but the relative importance of other sources
varies somewhat between the bottom 40 and top 60 percent of the population.45 Wages, on average, contribute
two-thirds to household incomes, while self-employment and agricultural incomes contribute less than 10 percent com-
bined. However, self-employment and incomes from agricultural activities, in particular, are more prominent for the bot-
tom 40 percent, while pensions are a larger share of income for the top 60 percent. An additional 1.7 percent (top 60) to
2.5 percent (bottom 40) comes from social assistance programs. Other income sources, including financial income, make up
less than 10 percent of total household income, even for the wealthiest households (Figure 35).
Figure 35
Sources of household income, by B40/T60 status, 2013
100%
80%
60%
40%
20%
0%
Overall Bottom 40% Top 60%
Wage income Self-employment income

Agricultural income Pension income
Social assistance income Other income sources
Note: The welfare aggregate is household consumption per capita.
Source: Authors’ calculations based on the Kazakhstan Household Budget Survey.
Households in the bottom 40 percent are not less likely to get income from various sources, except pensions, but
they receive smaller amounts for each type of income, except social assistance (Figure 36). The lack of income does
not come from receiving each source of income less often, as bottom 40 households are more likely to receive at least some
income from each different source except pensions (Figure 37). However, the amounts received from each source, including
wage and especially pension income, are smaller. Wage income of those in the bottom 40 percent was 38 percent less than
the national average, whereas top 60 households earned wages that were 16 percent higher than the national average.
Pension income is even more divergent, with bottom 40 households receiving 52 percent less than the average, while top
60 households receive 22 percent more, on average. This result is partially driven by demographics, as is shown above.
44
Unless explicitly stated otherwise, the statistics presented in this section are based on the working age (15–64 years old) population from the most
recent (2013) Household Budget Survey.
45
As noted earlier, the definition of “bottom 40 percent” (B40) or “top 60 percent” (T60) refers to the distribution of per capita household
consumption, in which individuals are ranked by the expenditure of their household, deflated by regional price indices, based on data available in the
2011, 2012 and 2013 Household Budget Survey. See Annex C for methodology.
25

Figure 36 Figure 37
Relative average per capita income by source and B40/T60 status, 2013 Percentage of households with any income by source and B40/T60 status, 2013
Social assistance Social assistance
Share of households with

any income by source
income income
Pension income Pension income
Agricultural income Agricultural income

Self-employment Self-employment
income income
Wage income Wage income
–60% –50% –40% –30% –20% –10% 0% 10% 20% 30% 0% 20% 40% 60% 80% 100%
Top 60% Bottom 40%
Top 60% Bottom 40% Overall
Household incomes have been slowly becoming more equal, and this has been driven by a convergence in wage
income (Figure 38). Per capita total income for bottom 40 households increased, in relative terms, from 41 percent to
38 percent below the national average, while household income for the top 60 percent fell, in relative terms, from 18 per-
cent to 16 percent above the national average. This is consistent with impacts on poverty presented earlier.
Figure 38
Trends in relative average total per capita income and per capita wage income by B40/T60 status, 2013
40%
20%
0%
2011 2012 2013
–20%
–40%
–60%
Total per capita income (bottom 40%)
Total per capita income (top 60%)
Part of the reason behind the lower per capita income levels of bottom 40 households is due to larger household
sizes relative to richer households (Table 8 in Annex 3). Average household size is 4.8 people among bottom 40 house-
holds, but only 3.1 people amongst the top 60. This implies that whatever income is generated by earners in the household
is spread over more people. Moreover, 31 percent of household members are under 15 in bottom 40 households versus
only 15 percent in top 60 households. Although bottom 40 households also have more people in their prime wage-earning
years, they have fewer retirement-age people. Neither children nor retirees generate labor income for the household directly,
but retirees can contribute to household resources through pension benefits. This effect is clearly inequality-increasing in
Kazakhstan, as income from pensions is far higher in top 60 than in bottom 40 households.
Bottom 40 households also reside in areas where earnings potential is lower. More than half (55 percent) of bot-
tom 40 households reside in rural areas, whereas only 32 percent of top 60 households are found in rural areas. Moreover,
26

bottom 40 households are concentrated in South Kazakhstan and East Kazakhstan, and make up the largest shares of the
population in South Kazakhstan and North Kazakhstan (Figure 39). However, these are the regions where wage employment
provides the least income to households (Figure 40). Conversely, the regions where wage employment provides the most
income (Almaty City, Astana City and Mangystau) are also the regions with the fewest bottom 40 households.
Figure 39
Share of bottom 40 households in each region, 2013
NORTH
KAZAKHSTAN
PAV L O D A R
KOSTANAI AKMOLA
Astana
WEST
KAZAKHSTAN
EAST
K A Z A K H S TA N
AKTOBE
ATYRAU KARAGHANDY
Budget, Performance Revi

& Strategic Planning
General Services
ALMATY Printing & Multimedia
KYZYLORDA This map was pr

MANGYSTAU The boundaries
ZHAMBYL shown on this m
Group, any judg
Almaty endorsement or
SOUTH
KAZAKHSTAN
Astana City: 20.82
49.70 – 61.23 35.53 – 43.19 21.08 – 30.33
Almaty City: 12.32
43.85 – 49.70 32.41 – 35.53 20.31 – 21.08
43.19 – 43.85 30.33 – 32.41
Note: The welfare aggregate is household consumption per capita. Cities of Astana and Almaty excluded.
Figure 40
Relative average income from wage employment by region, 2013
NORTH
KAZAKHSTAN
PAV L O D A R
KOSTANAI AKMOLA
Astana
WEST
KAZAKHSTAN
EAST
K A Z A K H S TA N
AKTOBE
ATYRAU KARAGHANDY
ALMATY
KYZYLORDA
MANGYSTAU
ZHAMBYL
Almaty
SOUTH
KAZAKHSTAN
Astana City: 144.15
116.83 – 149.70 83.12 – 88.31 59.22 – 73.30
Almaty City: 147.68
97.76 – 116.83 77.66 – 83.12 57.59 – 59.22
88.31 – 97.76 73.30 – 77.66
Note: Cities of Astana and Almaty excluded.
27

Employed members of bottom 40 households disproportionately work in low paying sectors (Figure 41). Members
of households in the bottom 40 are much more likely to work in the low-paying agriculture sector, and slightly more in the
somewhat better paying construction sector. However, members of top 60 households are more likely to be found in high
paying sectors such as mining, manufacturing, and finance, insurance and real estate. Part of this effect is related to the geo-
graphic localization of bottom 40 households: as there are relatively few of them in Almaty City, Astana City and Mangystau,
where the high paying jobs are found, it is normal that they are less likely to work in the high paying sectors.
Figure 41
Sector of activity by B40/T60 status, 2013
Other services
Health and social services
Education
Public administration services
Finance, insurance and real estate
Transportation and communication
Commerce
Construction
Public utilities
Manufacturing
Mining
Agriculture
0% 2% 4% 6% 8% 10% 12% 14% 16%
Top 60% Bottom 40%
This difference in sectors can be related to a skills gap between top 60 and bottom 40 households, which is
likely to grow in the future. Whereas 33 percent of household members in top 60 households have a tertiary educa-
tion, the figure for bottom 40 households is only 20 percent. Conversely, bottom 40 households have a higher share of
low skilled individuals, at the upper secondary (63 versus 56 percent), lower secondary (14 versus 9 percent) and primary
or below levels (4 percent versus 2 percent). As higher skills bring more earnings capacity and better wages, the lack of
skills may be contributing to keeping bottom 40 households poor. Although tertiary education has been more prevalent
in top 60 households than in bottom 40 households across generations, the gap has widened in more recent generations
(Figure 42). Among 60–64 year olds, the difference was 11 percentage points, while among the most recent school-leaving
cohort (25–29 year olds), the difference is 19 percentage points.46 If the skills gap continues to widen, recent trends
toward reduced inequality could reverse, with the gap in income and expenditure between bottom 40 and top 60 house-
holds potentially growing.
The combination of skills, household size and geography pushes individuals from bottom 40 households into
different types of jobs than those occupied by individuals from top 60 households (Table 8 and Table 9 in Annex C).
People from bottom 40 households are more likely to be out of the labor market or unemployed, and less likely to be
found in wage employment. The difference in activity rates is driven primarily by the larger share of individuals in schooling
and training among the bottom 40 percent. However, among active individuals, those from top 60 households are much
more likely to be wage employees, while those in bottom 40 households are more often found in farmstead work and self-
employment, or not employed at all (Figure 43).
46
Conversely, upper secondary education accounted for 71 percent of people in the oldest generation of bottom 40 households (relative to 65 percent
in top 60 households); the gap has widened in recent generations with 61 percent of poor 25–29 year olds having an upper secondary education
versus only 45 percent of top 60 25–29 year olds.
28

Figure 42 Figure 43
Educational attainment by age and B40/T60 status, 2013 Labor force status by B40/T60 status, 2013
100% Private wage employee

90%
Public wage employee
80%
Non-agricultural self-employed
70%
60% Non-agricultural employer
50% Farmstead worker
40%
Unemployed
30%
20% In school or training
10% NEET
0%
0% 5% 10% 15% 20% 25% 30% 35% 40%
25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64
Age group Top 60% Bottom 40%

Upper secondary (top 60) Tertiary (top 60)
Upper secondary (bottom 40) Tertiary (bottom 40) Source: Authors’ calculations based on the Kazakhstan Household Budget Survey.
Not only do individuals in bottom 40 and top 60 households differ in terms of their characteristics, they also
likely face a different set of constraints affecting their labor market outcomes (Table 10 in Annex C). A detailed
statistical analysis47 of what makes people more likely to be wage employees relative to self-employment, farmstead workers
or out of the labor force (for example) shows that most variables work in the same direction (e.g. women are more likely
to be out of the labor force for reasons other than education or training and less likely to be in private wage employment
for both bottom 40 and top 60 individuals).48 However, some factors play a larger role in the bottom 40 population than
in the top 60 population (for instance, location of residence). This suggests that there may be differences in unobservable
characteristics and constraints facing individuals from the bottom 40 and top 60 households, that cannot be captured with
the existing data.
Individuals from bottom 40 households typically earn less than those from top 60 households from wage employ-
ment and non-agricultural self-employment (Figure 68 in Annex C). For both upper secondary and tertiary educated
people, a larger share of members of bottom 40 households earn low wages and low income from self-employment than
among members of top 60 households, and conversely a larger share of members of top 60 households earn high wages
and high levels of income from self-employment.
Besides education levels, other observable characteristics cannot explain the differences in wages between
those in the bottom 40 and top 60 percent (Figure 69 in Annex C). After controlling for a large set of observable
characteristics49 and the fact that individuals in wage employment differ from others along observable and unobserved
dimensions, much of the difference between bottom 40 and top 60 individuals disappears, especially for those with upper
secondary education. However, it appears that bottom 40 wage workers with tertiary education are more likely to be
found at high incomes than would be expected given their education, gender, age, region, urban/rural residency and sec-
tor of activity, while top 60 individuals earn slightly less than would have been expected, in particular at the top end of
the wage distribution. The fact that such large unexplained variation remains further suggests a need for better data.50
47
The results of this analysis are presented in Table 10 in Annex C. The analysis of the determinants of job type was undertaken using a series of
multinomial logit models. For more details, please refer to Annex C.
48
Note that the magnitude of coefficients presented based on HBS differs from LFS. LFS-based estimates presented earlier are likely to be more
representative of the labor force. Hence, HBS-based estimates should be taken as indicative.
49
Including gender, 5-year age groups, education, region, urban residency and public/private sector employer.
50
Household Budget Survey is the only household survey which has information on both labor market status and wages and other incomes, as well as
consumption of households. However, the set of labor market and demographic variables is a lot more limited compared to LFS.
29

5. Challenges Ahead
and Policy Implications
In summary, despite a good labor market performance in the last decade, Kazakhstan continues to face several
jobs and skills challenges. During the past decade, Kazakhstan benefited from the global commodities boom to become
one of the top 10 fastest growing economies in the world. This sustained growth has enabled Kazakhstan to achieve rapid
reductions in poverty rates, resulting from strong labor market performance: labor force participation and employment rates
are high in Kazakhstan by international standards, especially for women; unemployment halved between 2001 and 2013,
from 10.4 to 5.2 percent; and real wages doubled between 2003 and 2013. Despite these gains, Kazakhstan faces a num-
ber of jobs challenges, which are related to some of the challenges resource rich economies face:
• Many people continue to be employed in low productivity jobs, particularly, in agriculture. Despite a significant
reduction in the share of employment in agriculture, there are still about 2 million people, or a quarter of all employed,
who remain engaged in this sector. Furthermore, many of the other sectors that increased their share of employment,
such as construction and education, also have below average productivity. As a result, overall labor productivity remains
low, especially in the non-oil sectors, and compared to countries with similar GDP per capita levels.51 Despite efforts to
increase import substitution in higher value added sectors, Kazakhstan’s tradable sectors have remained less competitive,
in part due to the exchange rate which was boosted by the resource exports during the period of high oil prices.52
• There are significant inequalities when it comes to the types of jobs and earnings workers have access to
across population groups. Men and more educated people tend to have better labor market outcomes, including
more access to formal wage employment and higher wages. There are large differences in labor market outcomes and
earnings between those in the bottom 40 percent compared to those in the top 60 percent, which cannot always be
explained by observable characteristics, suggesting that there may be unobservable barriers that people in the bottom
40 percent face on the labor market. Significant wage differentials across regions and sectors, even after controlling for
worker attributes, point to constraints to labor mobility, which appear to play a role in inhibiting some individuals from
moving to access higher paid jobs.
• Education is a key determinant of labor market outcomes, but the gap in attainment between those in the
bottom 40 percent and those in the top 60 percent is increasing, and low education quality may constrain
labor productivity growth. Educational attainment is strongly linked with labor market outcomes and largely deter-
mines access to wage employment and higher earnings. Although tertiary education has become more prevalent across
generations, the gap between the top 60 households and bottom 40 households has widened in more recent genera-
tions. Continued widening of the skills gap could result in a reversal of the recent trend toward reduced inequality. In
addition, the low quality of education may hamper individuals’ prospects on the labor market as well constrain labor
productivity growth. Despite high levels of enrollment and completion of secondary education, Kazakhstan does not
provide a quality education, as reflected in the poor, though markedly improved, performance on international student
assessments, such as the OECD’s PISA.
51
52
Under the pressures of low oil prices, the tenge has depreciated significantly in 2015, which could aid the price competitiveness of the economy.
30

Furthermore, the current economic slowdown is likely to increase unemployment and reduce real earnings
in the short to medium term, with some groups being more affected than others. Kazakhstan’s GDP growth has
slowed significantly due to a terms-of-trade (oil price) shock as well as the slowdown in Russia and the rebalancing of the
China’s economy.53 Simulations show that with lower projected GDP growth in the next few years, unemployment may
increase, particularly among older workers and the high skilled. This is despite the expected slowing down of labor force
growth in the next few years.54
Removing constraints at the macroeconomic level might not be enough to address Kazakhstan’s jobs challenge,
particularly for those in the bottom 40 percent of the population. Part of the solution to the jobs challenge may be
in economy-wide policies that promote investments, innovation and economic diversification. However, the relationship
between overall investment and employment is complex, not always resulting in the types of jobs that may benefit the
bottom 40 percent. Reallocating a given amount of capital to a given sector can have very different consequences in terms
of the number and composition of jobs created. Existing government programs such as the State Program for Industrial
and Innovative Development (SPIID) for 2015–2019 and economic stimulus program “Nurly Zhol” are aimed at economic
diversification and supporting the economy, respectively. However, these programs tend to favor capital intensive sectors or
generate temporary jobs.55
Economy-wide reforms need to be complemented with sectoral and regional approaches. In addition to the reforms
that target improvements in macro-economic management, investment climate, as well as business environment, it is impor-
tant to focus on targeted sectoral policies that aim to promote jobs for specific population groups in given regions. This
bottom-up approach implies that the government, in close consultation with social partners, also identifies sectoral policies
for employment creation, such as targeted interventions to create jobs in specific regions/sectors. This entails mapping key
sub-sectors and value chains within the economy to understand the potential for job creation and the types of bottlenecks
and regulatory failures that would need to be removed to achieve it. This mapping would provide information about the
types and level of investments that are necessary, the quantity of jobs that can be created, their composition in terms of
skills, and their regional distribution.
Going forward, addressing the jobs challenge would involve consideration of policies and programs at three
levels. These are further elaborated in the Jobs Strategy for Kazakhstan,56 which will help to enhance the impact of the
Government’s policies, programs, and projects on the availability, diversity, quality, and sustainability of jobs.
1. Facilitating the creation of new jobs through private sector investments, taking into account regional and population
disparities in terms of labor market outcomes. This involves interventions to remove constraints to the creation and
expansion of businesses—the main sources of jobs.
2. Upgrading production technologies and increasing the productivity of jobs in economic activities that are already
underway, with a focus on lagging regions. To improve living standards, programs and policies to improve the pro-
ductivity of existing jobs would be needed, with a focus on the poor. These could include programs that support self-
employment and small-scale entrepreneurship, aiming to improve earnings, or policies that help upgrade workers’ skills
and enhance their productivity.
3. Connecting individuals to jobs by facilitating labor market transitions; from inactivity or unemployment into jobs, or
from low to high productivity jobs. This includes addressing constraints to mobility and reforming and expanding active
labor market programs (counseling, intermediation, job search assistance, support to self-employment, and training).
These programs are important to address information problems in the labor market and address skills mismatches.
53
Kazakhstan’s GDP growth slowed to 4.1 percent in 2014 and to 1.2 percent in 2015, while prospects for 2016 growth are 0.1 percent. Source: World
Bank (2016). Kazakhstan First Fiscal Management and Resilience Programmatic Development Policy Financing. Program information document.
54
See Mohamed Ali Marouani, Bjorn Nilsson, Angela Elzir, Victoria Strokova and Namita Datta (2015) “Kazakhstan Jobs Impacts of Sectoral Investments:
Simulations using Dynamic Computable General Equilibrium Model Applied to Kazakhstan”. A note prepared for Kazakhstan: Jobs: Sector Specific
Analysis JERP (P153621).
55
These effects operate through two main channels: i) a substitution between capital and labor (as more capital reduces its rate of return, capital
becomes cheaper relative to labor); and ii) the reduction of investments in other sectors, which reduces intermediate consumption from the sector in
question.
56
World Bank (2016) Kazakhstan: Towards Development of a Jobs Strategy.
31

Annex A: Additional Tables and Graphs
Table A1
Key Labor market indicators, Kazakhstan, 2013
Overall Male Female Urban Rural

All Adults (15+)
Total Population 12,534,701 5,917,084 6,617,617 7,079,761 5,454,940
Labor Force Participation Rate 71.76% 77.32% 66.79% 69.39% 74.85%
Employment/Population 68.04% 73.81% 62.88% 65.62% 71.18%
Working Age (15–64)
Total Population 11,387,615 5,494,509 5,893,106 6,376,155 5,011,460
Employment 8,480,801 4,340,221 4,140,580 4,626,300 3,854,501
Unemployment 466,939 207,858 259,081 266,814 200,125
Inactive 2,439,875 946,430 1,493,445 1,483,041 956,834
NEET 1,075,294 302,224 773,070 669,513 405,781
Employment Rate 74.47% 78.99% 70.26% 72.56% 76.91%
Unemployment Rate 5.22% 4.57% 5.89% 5.45% 4.94%
Percentage NEET 9.44% 5.50% 13.12% 10.50% 8.10%
Labor Force Participation Rate 78.57% 82.77% 74.66% 76.74% 80.91%
Working Age Employed
Wage Employment 69.60% 68.85% 70.38% 82.09% 54.60%
Employers 1.87% 2.57% 1.13% 1.25% 2.62%
Own Account Workers 17.95% 19.43% 16.40% 15.16% 21.30%
Farmstead Workers 10.19% 8.77% 11.68% 14.08% 20.72%
Source: 2013 LFS.
32

Figure A1
Employment rates (15+), male and female, 2013
Male Female
Mexico Kazakhstan 60%

Kazakhstan 70% China
China Azerbaijan
Kyrgyzstan Canada
Malaysia Australia
Chile Russian Federation
Turkmenistan Tajikistan
Tajikistan United States
Australia Estonia
Uzbekistan Kyrgyzstan
Russian Federation Lithuania
Azerbaijan Ukraine
Canada Latvia
Georgia Georgia
United States Belarus
Estonia Chile
Armenia Armenia
Ukraine Malaysia
Latvia Uzbekistan
Belarus Mexico
Lithuania Turkmenistan
Moldova Moldova
0% 10% 20% 30% 40% 50% 60% 70% 80% 0% 10% 20% 30% 40% 50% 60% 70% 80%
Source: ILO.
33

Table A2
Private
Public Wage Formal Wage Non-Ag Self- Ag Self-
NEET Unemployed Employment Employment Employment Employment
Male –10.35 *** –0.75 ** –4.81 *** 11.44 *** 3.75 *** –0.09 ***
15–19 Years Old 15.22 *** –4.06 *** –14.86 *** –3.22 4.70 ** 1.47 ***
20–24 Years Old 1.68 * –2.70 *** –4.42 *** 2.82 ** 1.78 * 0.18 ***
30–34 Years Old –1.11 –0.13 1.14 –0.78 1.73 * –0.09
35–39 Years Old –1.05 –1.67 *** 5.52 *** –1.24 –1.02 –0.04
40–44 Years Old –2.89 *** –2.20 *** 8.78 *** –3.21 *** 0.41 –0.08
45–49 Years Old –0.16 –2.64 *** 8.33 *** –4.47 *** 0.59 0.00
50–54 Years Old 1.83 ** –2.40 *** 6.69 *** –3.69 *** –0.81 –0.08
55–59 Years Old 18.77 *** –2.73 *** 1.50 –11.56 *** –3.65 *** –0.04
60–64 Years Old 69.99 *** –5.46 *** –20.39 *** –27.89 *** –11.01 *** –0.35 ***
Upper Secondary Education –17.70 *** –4.29 *** 9.93 *** 14.44 *** –2.25 –0.23 **
Tertiary Education –15.66 *** –5.71 *** 31.01 *** 4.62 –7.60 *** –0.78 ***
Aktobe 3.13 * –1.48 ** –14.03 *** 20.03 *** –3.19 ** –0.52 ***
Almaty 13.63 *** –1.01 –1.96 –7.46 *** –0.27 –0.36 ***
Atyrau 3.60 ** –1.92 *** –15.23 *** 28.08 *** –9.40 *** –0.82 ***
West Kazakhstan 10.67 *** –0.68 –3.97 ** –0.25 –0.84 –0.21 ***
Jambyl 10.95 *** –0.35 6.12 *** –19.67 *** 6.43 *** –0.03
Karaganda 6.83 *** –1.31 ** –9.39 *** 16.43 *** –9.90 *** –0.59 ***
Kostanay –1.42 –0.05 –11.50 *** 19.99 *** –3.75 *** 0.17 *
Kyzylorda 15.54 *** –1.85 *** 7.12 *** –18.86 *** 3.08 * –0.73 ***
Mangystau 15.09 *** –2.00 *** 16.55 *** –11.68 *** –11.77 *** –0.94 ***
South Kazakhstan 15.66 *** –0.05 –4.82 *** –18.90 *** 7.08 *** –0.25 ***
Pavlodar 3.24 ** –1.11 * –11.27 *** 24.03 *** –12.43 *** –0.19 ***
North Kazakhstan 3.74 ** –0.41 1.11 8.46 *** –10.44 *** –0.08
East Kazakhstan 11.62 *** –1.21 * –17.08 *** 15.57 *** –5.35 *** –0.20 ***
Astana City 25.03 *** –1.63 ** –10.71 *** 4.72 * –12.35 *** –0.94 ***
Almaty City 9.06 *** 0.40 –6.98 *** 15.67 *** –8.71 *** –8.66 ***
Urban 0.89 ** –0.96 *** –0.76 4.88 *** 0.60 –2.26 ***
2 Person Household –2.29 *** –1.27 *** 2.08 ** 2.82 *** –1.17 * 0.03
3 Person Household –2.04 *** –1.54 *** 2.41 *** 2.63 *** –0.07 –0.08
4 Person Household –2.62 *** –1.47 *** 3.26 *** 1.86 –0.29 –0.03
5 Person Household –0.86 –1.95 *** 3.13 ** –1.32 1.93 * 0.07
6 Person Household 0.91 –0.23 0.65 –2.35 1.22 0.16
7 Person Household –0.76 –3.79 *** –2.65 6.50 –0.17 0.25
8 Person Household –2.72 –2.38 –5.52 7.61 1.47 0.65
9 Person Household –6.85 *** –5.99 *** 7.95 11.33 –2.57 0.21
10+ Person Household –0.48 2.08 –15.94 ** –19.06 *** 9.53 1.50
Interpretation: A male has a 10.35 percentage point lower chance of being NEET (not in employment, education or training) than a female when both
have the average characteristics of the working age population.
Note: Multinomial logits estimated separately on the following outcomes: NEET, in school or training, unemployment, agricultural self-employed, non-
agricultural employer, non-agricultural self-employed, public wage employment and private wage employment. Reference categories were female,
25–29 years old, lower secondary or less, rural resident and one-person household. The models also include controls for region of residence.
*** signifies a marginal effect that is significant at the 1 percent level, ** signifies a marginal effect that is significant at the 5 percent level and
* signifies a marginal effect that is significant at the 10 percent level.
34

Figure A2 Figure A3
Age by labor force status, shares, 2013 Age by type of employment, shares, 2013
100% 100%
90% 90%
80% 80%
70% 70%
60% 60%
50% 50%
40% 40%
30% 30%
20% 20%
10% 10%
0% 0%
p.
ol
ET
p.
r
en
ke
ke
e
e
po
ho
po
NE
oy
oy
oy
or
or
m
sc
pl
pl
pl
e
oy
tw
w
ag
ag
Em
em
In
Em
pl
d
un
ea
g
em
Un
in
in
co
st
k
rm
e
ac
or
or
ag
W
Fa
W
n
W
w
O
15–24 25–34 35–44 45–54 55–64 15–24 25–34 35–44 45–54 55–64
Figure A4 Figure A5
Age by labor force status, number of people, 2013 Age by type of employment, number of people, 2013
9,000 7,000
8,000
6,000
7,000
5,000
6,000
Thousands
Thousands
5,000 4,000
4,000 3,000
3,000
2,000
2,000
1,000
1,000
0 0
ed
ed
ol
ET
er
r
en
ke
ke
ho
oy
NE
oy
oy
or
or
m
pl
sc
pl
pl
oy
tw
w
Em
Em
em
In
pl
d
un
ea
em
Un
co
st
rm
e
ac
ag
Fa
n
W
15–24 25–34 35–44 45–54 55–64

O
Source: Authors’ calculations using LFS 2013. 15–24 25–34 35–44 45–54 55–64
35

Figure A6 Figure A7
Job type by age for employed population, in %, 2013 Job type by age for employed population, number of employed, 2013
100% 3,000
2,500
80%
2,000
Thousands
60%
1,500
40%
1,000
20%
500
0% –
15–24 25–34 35–44 45–54 55–64 15–24 25–34 35–44 45–54 55–64
Wage employment Employer Wage employment Employer

Own account worker Farmstead worker Own account worker Farmstead worker
Figure A8 Figure A9
Distribution of self-employed by age group, 2013 Distribution of self-employed by education, 2013
250 100% 600 100%

90% 90%
500
200 80% 80%
70% 400 70%
Thousands
Thousands
150 60% 60%

50% 300 50%
100 40% 40%
200
30% 30%
50 20% 20%
100
10% 10%
– 0% – 0%
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
ry
l)
ry
ry
na
ar
ia
da
ia
ia
ye
tio
ec
rt
rt
on
sp
te
te
12
ca
ec
l(
vo
ed
n
ls
et
na
ha
et
al
ra
pl
io
t
pl
Total (left axis)

iti
Percentage (right axis)

m
ne
at
ss
m
In
co
Le
Ge
Co
Vo
In
Total (left axis) Percentage (right axis)
36

Figure A10 Figure A11
Distribution of self-employed by household size and gender, 2013 Distribution of self-employed by relation to head of household and gender, 2013
60% 600
500
50%
400
40%
300
30%
200
20%
100
10% 0
Head Spouse Children Parents Other or
not relate
0%
n
ns
ns
ns
ns
5+
e
Male Female
al
al
so
so
so
so
so
m
en
r
pe
Fe
pe
pe
pe
pe
th
1

2
e
or
M

Distribution of farmstead workers by age group, 2013 Distribution of farmstead workers by education, 2013
140 100% 500 100%

90% 90%
120 400
80% 80%
70%
Thousands
100 70%
300 60%
Thousands
60%
80 50%
50% 200 40%
60
40% 30%
100 20%
40 30%
10%
20%
20 0 0%
10%
rs
ry
l)
ry
ry
na
cia
a
da
ia
ia
ye
tio
rt
rt
e
0%
on
–
sp
te
te
12
ca
ec
l(
vo
ed
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
ls
et
na
a
et
al
th
ra
pl
io
pl
iti
m
ne
at
ss
m
In
co
Le
Ge
Co
Vo
In
Source: Authors’ calculations using LFS 2013. Total (left axis) Percentage (right axis)
37

Distribution of farmstead workers by household size and gender, 2013 Distribution of farmstead workers by relation to head of household
and gender, 2013
60%
300
50%
250
40% 200
Thousands
150
30%
100
20%
50
10%
0
0%
not related
n
ns
ns
ns
ns
5+
e
al
al
so
so
so
so
so
m
en
r
Male Female
pe
Fe
pe
pe
pe
pe
th
1
e
or

M

Distribution of wage employees by age group, 2013 Distribution of wage employees by education, 2013
1,200 100% 2,500 100%
90% 90%
1,000 2,000 80%
80%
70%
Thousands
70%
800 1,500 60%
60%
50%
Thousands
600 50% 1,000 40%

40% 30%
400 500 20%
30%
10%
20%
200 – 0%
10%
s
l)
ry
ry
na
ar
ar
cia
ia
tia
ye
nd
tio
rt
e
– 0%
sp
te
te
12
co
ca
l(
se
vo
ed
15–19
20–24
25–29
30–34
35–39
40–44
45–49
50–54
55–59
60–64
et
na
ha
et
l
al
ra
pl
io
st
pl
iti
m
ne
at
m
s
In
co
Le
Ge
Co
Vo
In

38

Distribution of wage employees by household size and gender, 2013 Distribution of wage employees by relation to head of household
and gender, 2013
60%
3,000
50%
2,500
40% 2,000
Thousands
30% 1,500
1,000
20%
500
10%
0
0%
not related
n
ns
ns
ns
ns
5+
e
al
al
so
so
so
so
so
m
en
r
pe
Male Female
Fe
pe
pe
pe
pe
th
1
e
or
M

Labor force status by education level, percentage, 2013 Labor force status by education level, total number, 2013
100% 3,500
3,000
80%
2,500
Thousands
2,000
60%
1,500
40% 1,000
500
20%
–
s
l)
ry
ry
na
ar
ar
cia
tia
ia
ye
nd
io
rt
0%
e
r
at
sp
te
te
12
co
l(
se
vo
ed
n
et
na
s
l)
ry
ry
na
ha
ar
ar
et
l
ia
al
ra
pl
ia
ia
io
ye
nd
tio
ec
pl
iti
rt
rt
m
ne
at
ss
m
sp
te
te
In
co
12
co
ca
Le
Ge
Co
Vo
l(
In
se
vo
ed
n
et
na
a
et
al
al
th
pl
tio
er
pl
iti
m
ss
m
ca
In
co
Le
Ge
Co
Vo
In
Employed Unemployed In school NEET

Employed Unemployed In school NEET
39

Figure A22
Education attained by type of employment, 2013
100%
80%
60%
40%
20%
0%
Wage Employer Own account Farmstead

employment worker worker
Less than 12 years General secondary

Initial vocational Vocational (special)
Incomplete tertiary Completed tertiary
Figure A23
Employment by sector and education, 2013
100% Less than 12 years
80% Incomplete tertiary
General secondary
60%
Completed tertiary
40%
Vocational (special)
20%
Initial vocational
0%
re
ce
s
n
rie
tie
ce
at
rin
tio
tio
tio
tu
er
vi
st
st
ili
tu
uc
ica
ul
ra
er
le
du
ut
ric
m
ac
tr
ist
rs
un
a
in
ns
ic
Co
uf
Ag
re
in
e
m
bl
Co
th
e
an
m
d
m
tiv
Pu
O
an
ad
M
co
ac
ce
ic
d
tr
an
bl
an
ex
Pu
ur
n
d
io
an
ns
at
,i
g
rt
ce
in
an
sp
in
M
an
n
Fi
Tr
40

Figure A24
Comparison of PISA 2012 scores for select countries and ECA/OECD averages, 2013
520 One year of

schooling
500
480
PISA 2012 Score
460 432 425

440
420 393
400
380
360
Kazakhstan
Malaysia
Chile
ECA
Russia
Turkey
OECD
Malaysia
Chile
Kazakhstan
Turkey
ECA
Russia
OECD
Malaysia
Kazakhstan
Chile
Turkey
ECA
Russia
OECD
Reading Math Science
Source: OECD, PISA 2012 Results (2012); WB, Strengthening Kazakhstan’s Education System (2014).
41

Annex B: Methodology and Additional
Results on Informality
Methodology
Most of the statistics presented are weighted sample statistics. The weights used were drawn directly from the vari-
ous years’ labor force surveys, and the years 2010 to 2013 were used.
The statistical analysis was based on a probit model with selection bias correction. The main equation explained the
probability of formal wage employment (private or public) relative to informal wage employment. Since the set of individuals
actually occupying a wage job (as opposed to self-employed or out of the labor force, for example) is not a random sample
of the population, one has to correct the formal wage employment model estimates for the probability for being observed in
wage employment. This is done through a (probit) selection equation for selection into wage employment. The disturbance
terms between the selection equation and the formal wage employment equation can be correlated, and the system is esti-
mated by maximum likelihood.
Table B1
Characteristics of wage workers by formality status
All Wage Public Sector Private Formal Private Informal

Workers Wage Workers Wage Workers Wage Workers
Number of Workers 5,899,592 2,495,590 2,916,665 487,337
Share of All Wage Workers 100.0% 42.3% 49.4% 8.3%
Percentage Male 50.6% 43.6% 56.2% 53.7%
Average Age 38.0 38.8 37.6 36.7
Percentage with Lower Secondary or Below Education 0.8% 0.5% 0.8% 1.8%
Percentage with Upper Secondary Education 58.7% 47.0% 64.3% 84.7%
Percentage with Tertiary Education 40.5% 52.5% 34.9% 13.5%
Share Living in Urban Areas 64.4% 61.7% 69.6% 46.4%
Average Household Size 2.00 2.01 1.98 2.05
Contract and Social Security 100% 98% 0%
Contract Only 0% 2% 38%
Social Security Only 0% 0% 6%
No Contract or Social Security 0% 0% 56%
42

Table B2
Marginal effects for probit model of informality with selection bias correction, 2013
Marginal Conditional Marginal Conditional

Effect Marginal Effect Effect Marginal Effect
Male 0.44 ** 0.49 *** Urban –0.51 –0.28
Age 15–19 –2.60 *** –2.86 *** Aktobe –2.56 *** –2.33 ***
Age 20–24 –0.85 ** –1.02 *** Almaty –2.37 *** –2.16 ***
Age 30–34 –0.28 –0.24 Atyrau –2.55 *** –2.30 ***
Age 35–39 0.19 0.23 West Kazakhstan –2.78 *** –2.55 ***
Age 40–44 –0.18 –0.10 Jambyl –1.97 *** –1.84 ***
Age 45–49 –0.73 ** –0.63 ** Karaganda –1.30 *** –1.10 ***
Age 50–54 –0.60 * –0.51 * Kostanay –2.71 *** –2.48 ***
Age 55–59 –0.59 * –0.63 ** Kyzylorda –2.06 *** –1.88 ***
Age 60–64 –2.21 *** –2.35 *** Mangystau –2.87 *** –2.62 ***
Upper Secondary Education 1.25 1.45 ** South Kazakhstan 1.51 * 1.05 *
Tertiary Education –1.62 –1.07 Pavlodar –1.78 *** –1.58 ***
Mining and Extractive Industries –10.42 *** –9.29 *** North Kazakhstan –2.01 *** –1.81 ***
Manufacturing –5.52 *** –4.92 *** East Kazakhstan –2.27 *** –2.07 ***
Public Utilities –8.43 *** –7.52 *** Astana City –2.59 *** –2.35 ***
Construction –1.16 ** –1.04 *** Almaty City –2.08 *** –1.87 ***
Commerce 1.83 *** 1.63 ***
Transportation and Communication –3.83 *** –3.41 ***
Financial, Insurance and Real Estate –4.21 *** –3.75 *** Correlation
Public Administration Services –8.69 *** –7.75 *** Coefficient
Education –9.59 *** –8.55 *** (Selection Effect) = 0.554 ***
Health and Social Services –10.66 *** –9.51 ***
Other Services 0.01 0.01
Interpretation: Men have a 0.44 percentage point higher probability of being informal wage workers (as opposed to formal wage workers) than women
when in wage employment. Accounting for the fact that men are also more likely to be in wage employment and that those with a higher probability
of being in wage employment also have a higher probability of being informal (positive significant correlation coefficient), men have a 0.49 percentage
point higher chance than women to be seen in informal wage employment overall.
Notes: Reference categories include: female, age 25–29, lower secondary education and below, agriculture sector, rural and Akmola region. Exclusion
restrictions for the selection equation included a set of 10 indicators for household size.
*** signifies a marginal effect that is significant at the 1 percent level, ** signifies a marginal effect that is significant at the 5 percent level and
* signifies a marginal effect that is significant at the 10 percent level.
43

Annex C: Methodology of the Bottom
40 percent Analysis and Results
Methodology
The descriptive analysis undertaken is based on weighted descriptive statistics. As the official sample weights were
not provided, the World Bank poverty group designed a weighting scheme for the HBS that is representative of the number
of households in each urban versus rural area in each region. There is, however, no calibration to a population census used
in establishing sample weights, and thus the representativity of the data for particular population groups is not guaranteed.
The analysis of the determinants of job type was undertaken using a series of multinomial logit models. This
approach assumes that there is an unobservable (latent) value to each possible outcome, and the outcome with the highest
value is the one observed in the data. This value need not reflect exclusively preference parameters of individuals; it can also
incorporate matching processes on the labor market and firm objectives. This approach implicitly assumes “independence of
irrelevant alternatives,” in that factors that change the value of one alternative do not affect the relative rankings of other alter-
natives among themselves. The multinomial logit approach assumes that each latent value is a linear function of the observable
characteristics in the model and a random variable that follows a standard type-1 extreme value distribution.
The table presents marginal effects estimated from the multinomial logit models. Marginal effects describe how
much the probability of a particular outcome changes when the variable in question changes by one unit (or goes from 0 to
1 in the case of indicator variables). As multinomial logit models are highly nonlinear, the estimated coefficients cannot be
directly interpreted in terms of the probability of choosing a particular outcome. Moreover, the estimated marginal effects will
typically depend on the reference values for the explanatory variables at which the calculations are made. This paper sets the
covariates to the population average (overall, bottom 40 or top 60, depending on the model) and calculates the change in
the probability of each outcome numerically.
Kernel density estimates of different income sources are also presented. Kernel density estimators are similar to his-
tograms, in that they count the number of observations with a given value of variable in question (for example, log income
from wage employment). They differ, however, in that they use a weighted count that includes the number of observations
with values near the one being evaluated, with the weighting function (kernel) and set of points over which the weighted
count is taken (related to the bandwidth) being chosen by the analyst. The figures use an Epanechnikov kernel, a bandwidth
of 0.04 for wage income and a bandwidth of 0.1 for self-employment and agricultural income.
The kernel density estimates of residuals from a log wage regression were constructed using a Heckman (1979)
selection-bias corrected wage regression. This model regressed, separately for 10 different sectors,57 log wage income
on gender, 5-year age groups, education, region, urban residency and public/private sector employer. The selection equation
57
These effects operate through two main channels: i) a substitution between capital and labor (more easily available capital reduces its cost, making
it cheaper relative to the price of labor); and ii) a reduction of investments in other sectors, which reduces intermediate consumption of goods and
services produced by the sector receiving the injection of capital from the sectors from which the capital is taken.

These effects operate through two main channels: i) a substitution between capital and labor (more easily available capital reduces its cost, making
it cheaper relative to the price of labor); and ii) a reduction of investments in other sectors, which reduces intermediate consumption of goods and
services produced by the sector receiving the injection of capital from the sectors from which the capital is taken.

The sectors included agriculture, mining, manufacturing, public utilities, construction, commerce, transportation and communication, finance,
insurance and real estate, public administration services and other services.
44

also included indicators for household size, but did not include the public/private indicator. Unconditional expected log wage
income was subtracted from observed log wage income, and kernel density estimators of this residual were calculated with
an Epanechnikov kernel using a bandwidth of 0.1.
Figure C1
Earnings distributions by education, income source and bottom 40 classification, 2013
Wage Income—Upper Secondary Education Wage Income—Tertiary Education

100,000 200,000 300,000 400,000 500,000
100,000 200,000 300,000 400,000 500,000

0
0
.000028 .00003 .000032 .000034 .000028 .00003 .000032 .000034
Log (wage income (annual), relative to national average) Log (wage income (annual), relative to national average)
Overall Bottom 40 percent Top 60 percent

Self-Employment Income—Upper Secondary Education Self-Employment Income—Tertiary Education

40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
0
.00018 .0002 .00022 .00024 .00026 .00028 .00018 .0002 .00022 .00024 .00026 .00028
Log (self-employment income (annual), relative to national average) Log (self-employment income (annual), relative to national average)

45

Figure C2
Wage distributions after controlling for observables by education and bottom 40 classification, 2013
Upper Secondary Education Tertiary Education
.01 .01
.008 .008
.006 .006
.004 .004
.002 .002
0 0
–100 –50 0 50 100 –100 –50 0 50 100
Log (unexplained component of log (wage income), Log (unexplained component of log (wage income),
relative to national average) relative to national average)
Overall Bottom 40 percent Top 60 percent Overall Bottom 40 percent Top 60 percent
46

Table C1
Household level descriptive statistics
2011 2012 2013

Overall Bottom 40% Top 60% Overall Bottom 40% Top 60% Overall Bottom 40% Top 60%
Average Household Head Age 47.7 46.1 48.4 47.9 46.0 48.8 48.0 46.3 48.7
Average Household Size 3.7 4.8 3.1 3.6 4.8 3.1 3.5 4.7 3.0
1701501_Kazakhstan Labor Market.indd 47

Children (Under 15) 20.4% 31.5% 15.6% 20.7% 32.6% 15.7% 19.6% 31.4% 14.7%
Youth (15–24) 16.0% 17.0% 15.6% 14.5% 15.9% 14.0% 13.9% 15.0% 13.4%
Prime Age (25–54) 42.7% 40.4% 43.8% 42.7% 40.0% 43.9% 43.5% 40.6% 44.7%
Older (55–64) 12.4% 6.8% 14.8% 13.3% 6.8% 16.0% 13.5% 7.8% 15.9%
Retirees (65 and Above) 8.5% 4.3% 10.3% 8.8% 4.7% 10.5% 9.5% 5.2% 11.3%
Primary Education or Less 3.1% 4.2% 2.7% 3.0% 4.2% 2.5% 2.5% 3.6% 2.0%
Lower Secondary 13.1% 17.0% 11.4% 11.6% 14.5% 10.4% 10.3% 13.8% 8.8%
Upper Secondary 56.3% 62.6% 53.6% 57.1% 63.0% 54.7% 58.1% 62.6% 56.3%
Tertiary 27.4% 16.2% 32.3% 28.2% 18.3% 32.4% 29.1% 20.0% 32.9%
Urban 61.1% 45.2% 68.0% 61.3% 47.9% 66.9% 61.2% 47.8% 66.8%
Akmola 4.9% 5.4% 4.7% 4.8% 5.3% 4.6% 4.8% 6.3% 4.2%
Aktobe 4.6% 4.1% 4.8% 4.4% 3.9% 4.7% 4.2% 3.8% 4.4%
Almaty 10.2% 5.7% 12.1% 10.4% 7.4% 11.7% 10.8% 6.4% 12.7%
Atyrau 2.5% 2.6% 2.5% 2.4% 2.0% 2.6% 2.4% 2.2% 2.5%
West Kazakhstan 3.8% 4.4% 3.5% 3.6% 4.6% 3.2% 3.5% 4.4% 3.1%
Jambyl 5.7% 8.5% 4.5% 5.6% 9.5% 4.0% 5.8% 8.4% 4.8%
Karaganda 9.3% 8.0% 9.8% 9.1% 7.7% 9.8% 8.9% 8.5% 9.1%
Kostanay 6.4% 6.7% 6.3% 6.3% 6.6% 6.2% 6.2% 6.8% 5.9%
Kyzylorda 3.1% 3.0% 3.1% 3.1% 3.3% 3.0% 3.0% 4.0% 2.6%
Mangystau 2.6% 3.4% 2.3% 2.5% 3.1% 2.3% 2.6% 1.5% 3.1%
South Kazakhstan 12.2% 20.5% 8.6% 12.2% 21.9% 8.1% 12.4% 22.5% 8.2%
Pavlodar 5.3% 6.0% 5.0% 5.2% 5.2% 5.2% 5.4% 3.9% 6.0%
North Kazakhstan 4.2% 5.0% 3.8% 4.2% 4.6% 4.0% 4.0% 5.2% 3.4%
East Kazakhstan 10.0% 11.3% 9.5% 10.3% 9.1% 10.8% 10.3% 9.7% 10.5%
Astana City 4.5% 2.7% 5.3% 4.9% 3.0% 5.8% 4.8% 2.8% 5.6%
Almaty City 10.6% 2.6% 14.1% 10.7% 2.8% 14.0% 11.0% 3.7% 14.0%
Relative Average per Capita
Wage Income –41.0% 17.8% –38.0% 16.0% –38.1% 15.9%
Self-Employment Income –17.5% 7.6% –17.0% 7.2% –19.2% 8.0%
Agricultural Income –13.0% 5.6% –15.8% 6.6% –16.6% 6.9%
Pension Income –56.2% 24.3% –54.4% 22.9% –51.9% 21.7%
Social Assistance Income 18.0% –7.8% 8.7% –3.7% 16.7% –7.0%
Notes: Per capita measures assign a weight of 1 to each household resident with a familial relation to the household head. Relative average compares the average income from a particular
source in the sub-population to the overall mean. For example, average per capita wage income in households in the 40 percent poorest part of the population was 41 percent below the
47
national average, while average per capita wage income in households in the richest 60 percent was 17.8 percent above the national average.
5/31/17 12:19 PM
Table C2
48
Individual level descriptive statistics
2011 2012 2013

Bottom Bottom Bottom
Overall 40% Top 60% Overall 40% Top 60% Overall 40% Top 60%
Male 45.9% 47.5% 44.9% 45.7% 47.7% 44.6% 45.7% 47.7% 44.6%

Youth (15–24) 25.7% 28.0% 24.4% 23.9% 26.8% 22.3% 22.7% 25.3% 21.2%
Prime Age (25–54) 61.3% 62.4% 60.7% 62.2% 63.5% 61.5% 62.9% 64.1% 62.3%
Older (55–64) 13.0% 9.6% 15.0% 13.9% 9.7% 16.2% 14.4% 10.6% 16.5%
Primary Education or Less 3.1% 4.0% 2.6% 3.3% 4.4% 2.6% 2.8% 3.9% 2.2%
Lower Secondary 13.8% 17.7% 11.6% 11.6% 14.2% 10.2% 10.2% 13.2% 8.4%
Upper Secondary 57.3% 63.1% 54.0% 58.6% 64.1% 55.6% 59.7% 64.2% 57.1%
Tertiary 25.8% 15.2% 31.9% 26.4% 17.3% 31.5% 27.4% 18.7% 32.2%
Agriculture 9.3% 15.5% 6.2% 8.5% 12.9% 6.3% 8.4% 12.8% 6.2%
Mining 3.6% 3.2% 3.7% 3.6% 3.4% 3.7% 3.6% 3.0% 3.8%
Manufacturing 4.5% 3.9% 4.8% 4.2% 3.7% 4.5% 4.4% 3.9% 4.6%
Public Utilities 3.9% 3.2% 4.2% 3.9% 3.6% 4.0% 3.6% 3.0% 3.9%
Construction 9.0% 10.1% 8.4% 8.8% 10.0% 8.1% 8.8% 10.5% 7.9%
Commerce 14.0% 14.2% 14.0% 13.9% 13.8% 13.9% 13.7% 13.7% 13.7%
Transportation and Communication 10.8% 9.6% 11.4% 11.5% 10.8% 11.8% 12.2% 11.5% 12.5%
Finance, Insurance and Real Estate 3.5% 1.6% 4.4% 3.8% 2.3% 4.5% 4.1% 2.0% 5.1%
Public Administration Services 11.5% 9.0% 12.7% 11.1% 9.1% 12.1% 10.6% 9.0% 11.3%
Education 13.8% 13.8% 13.8% 13.6% 13.2% 13.7% 14.0% 13.6% 14.2%
Health and Social Services 5.9% 5.0% 6.4% 6.4% 5.5% 6.8% 6.1% 5.7% 6.3%
Other Services 10.3% 11.0% 10.0% 10.8% 11.6% 10.4% 10.5% 11.2% 10.2%
NEET 14.9% 18.1% 13.1% 15.0% 18.1% 13.3% 14.3% 17.0% 12.7%
In School or Training 14.8% 16.9% 13.5% 13.9% 16.4% 12.5% 13.2% 15.6% 11.8%
Unemployed 3.5% 4.8% 2.8% 2.6% 3.3% 2.1% 2.4% 3.1% 2.0%
Farmstead Worker 2.3% 3.5% 1.6% 2.1% 2.6% 1.7% 2.4% 3.4% 1.9%
Non-Agricultural Employer 0.1% 0.0% 0.2% 0.2% 0.1% 0.3% 0.2% 0.1% 0.2%
Non-Agricultural Self-Employed 7.2% 8.5% 6.4% 6.6% 8.0% 5.8% 6.9% 8.4% 6.1%
Public Wage Employee 21.9% 18.3% 24.0% 22.2% 19.0% 24.0% 21.2% 19.0% 22.4%
Private Wage Employee 35.3% 29.9% 38.4% 37.5% 32.4% 40.3% 39.5% 33.4% 42.9%
Notes: NEET = Not in Employment, unemployment, Education or Training.
5/31/17 12:19 PM
Table C3
Multinomial logit marginal effects by bottom 40 classification, 2013
Non-Agricultural Public Wage Private Wage

NEET Unemployment Self-Employed Employment Employment
Bottom 40% Top 60% Bottom 40% Top 60% Bottom 40% Top 60% Bottom 40% Top 60% Bottom 40% Top 60%

Male –31.8 –22.0 –0.1 –0.2 4.7 6.4 –9.8 –15.5 37.0 31.3
15–19 Years Old 4.3 10.2 6.5 8.9 –0.2 –3.2 –7.0 –11.4 –3.6 –4.6
20–24 Years Old 0.3 –1.8 4.1 2.5 –0.2 0.2 –0.1 0.7 –4.1 –1.7
30–34 Years Old –2.6 –1.5 –1.9 –0.9 2.5 1.0 5.3 3.6 –3.2 –2.3
35–39 Years Old –7.9 –5.2 –3.1 –1.6 3.1 3.3 9.7 7.4 –1.8 –3.9
40–44 Years Old –10.3 –6.3 –3.3 –2.2 4.0 4.2 11.7 8.6 –2.1 –4.4
45–49 Years Old –8.2 –6.8 –3.2 –1.9 2.1 5.4 15.6 12.4 –6.2 –9.1
50–54 Years Old –5.9 –3.5 –2.9 –1.6 3.4 3.2 13.8 11.0 –8.5 –9.2
55–59 Years Old 8.8 12.0 –2.7 –1.7 0.2 1.1 10.2 4.4 –16.5 –15.7
60–64 Years Old 54.9 62.0 –3.3 –2.1 –3.7 –5.1 –9.0 –14.3 –39.0 –40.6
Upper Secondary Education –9.9 –6.6 –1.9 –0.6 –1.2 –1.4 9.8 9.9 3.2 –1.4
Tertiary Education –13.7 –11.1 –2.9 –1.8 –4.4 –4.5 40.4 35.0 –19.2 –17.5
Urban –4.2 –2.5 0.6 –0.1 –0.9 0.3 –7.8 –12.1 12.4 14.6
3 Person Household –0.2 3.4 –1.1 1.8 –2.5 0.8 0.7 0.2 3.2 –6.2
4 Person Household –0.9 5.6 –1.5 2.0 –1.8 2.1 4.0 0.7 0.2 –10.4
5 Person Household 0.3 8.0 –1.6 2.5 –0.9 2.5 3.2 –0.1 –1.0 –13.0
6 Person Household 1.3 9.7 –1.4 3.6 –0.6 3.7 5.9 0.0 –5.3 –17.0
7 Person Household 5.0 9.7 –1.3 3.3 –1.8 2.5 6.3 2.1 –8.1 –17.6
8 Person Household 4.5 8.3 0.2 7.1 –2.2 2.3 2.1 –2.8 –4.6 –14.9
9 Person Household 12.0 20.4 1.1 1.5 –0.6 0.0 –1.1 –2.2 –11.4 –19.8
10 or More Person Household 9.4 12.5 –0.5 4.0 –1.9 7.9 –0.4 –7.5 –6.6 –16.9
Interpretation: A male from a bottom 40 household had a 31.8 percentage point lower chance of being in neither employment, unemployment, education or training than a female when
both have the average characteristics of individuals in bottom 40 households, and a male from a top 60 household had a 22.2 percentage point lower chance than a female with average
characteristics of individuals in top 60 households.
Note: Multinomial logits estimated separately on each Bottom 40 Classification on the following outcomes: NEET (Not in Employment, unemployment, Education or Training), in school or
training, unemployment, farmstead worker, non-agricultural employer, non-agricultural self-employed, public wage employment and private wage employment. Reference categories were
female, 25–29 years old, lower secondary or less, rural resident and one and two person households combined. The models also include controls for region of residence. Figures shown are
rounded to 1 significant digit; marginal effects corresponding to coefficients that are not statistically significant at the 5% level are shown in light blue. There are no “true zeros” among the
estimated marginal effects.
49
5/31/17 12:19 PM
Annex D: Methodology and Results
of the Earnings Analysis
Methodology
Estimating the determinants of wages is different from simply calculating average wages for different types of individuals, as
some characteristics tend to go together (for example, urban areas tend to concentrate more educated workers). Thus when
one sees higher wages in urban areas, it is not clear whether this is due to urban employers paying all workers more, or more
educated workers earning more and employers in urban areas paying comparably skilled workers the same amount as rural
employers. Regression analysis allows one to statistically control for differences in all of the characteristics simultaneously in
order to draw conclusions about how each individual factor affects wages.
The analysis here also attempts to address the problem of “selection bias”, using econometric techniques proposed by
Heckman (1979). Since the objective is to study the determinants of wages, it is important to consider that some people are
more likely to find wage jobs than others. Without special treatment, the estimates of the determinants of wages would
be biased because only certain people (the “best”) among those unlikely to get wage jobs would actually be seen in wage
employment, and we can only use the wages that we can measure in a regression.
The value added of the analysis presented here stems from the focus on the sector-geography type of constraints. The analy-
sis undertaken here exploits the labor force survey, which is designed to be representative of the working age population,
for studying the structure of employment. However, estimates from the household budget survey are needed to quantify
incentives for mobility, as the labor force survey contains no information on earnings. By combining both surveys, one gets
a more complete picture of the type of skills that are the most highly rewarded in each region and where the people with
those skills actually live. This is necessary to assess the importance of mobility constraints for people of different skill levels.
A “spatial” analysis of employment and skills can help guide more nuanced policy making at a regional level.
Technical Discussion of Results

The wage equations were estimated in logarithmic form following the technique for correction of selection bias proposed
by Heckman (1979). In this technique, participation in the estimation sample is modeled using a dichotomous probit model,
and an additional term is then introduced into the wage equation that corresponds to the expected residual from this selec-
tion equation. When the disturbance term from the wage equation and the disturbance term from the latent model of
the selection equation are jointly normally distributed, the expected residual takes on a form known as the “inverse Mills
ratio”. Moreover, if only a selected subset of observations are used to estimate the wage model, inclusion of the inverse
mills ratio purges the disturbance term of its correlation with the variables in the wage equation, thereby eliminating bias
due to selection.
Once the coefficients are estimated for each sector, the average share of urban jobs and the average share of public sector
jobs in region is calculated, as is the share of men and the share of the population in each age group for the whole country.
Using these average values, expected log wages are calculated specific to each sector in each region for each education
level by manipulating the set of indicator variables for region and education in each sector’s wage model. This provides
expected log wages for all combinations of sector, region and education, and the exponential of the log wages is taken to
give expected wages.
50

The available jobs in each region by sector are then estimated using the share of employment in the sector observed in each
region. These shares are multiplied by the corresponding expected wages for the sector in the region, for each education
level, and then summed across sectors to give a weighted average expected wage, where the weights reflect the observed
share of jobs. This is how expected wages for each level of education in each region are calculated.
Kernel density estimates of wages by sector are also presented. Kernel density estimators are similar to histograms, in that
they count the number of observations with a given value of variable in question (for example, log income from wage
employment). They differ, however, in that they use a weighted count that includes the number of observations with values
near the one being evaluated, with the weighting function (kernel) and set of points over which the weighted count is taken
(related to the bandwidth) being chosen by the analyst. The figures presented use an Epanechnikov kernel and a bandwidth
of 0.5.
51

52
Table D1
Regression results from Heckman selection-corrected log wage regressions—2013
Finance,
Transportation Insurance Public Health
All Public and and Real Administration and Social Other
Sectors Agriculture Mining Manufacturing Utilities Construction Commerce Communication Estate on Services Education Services Services

Male 28.8% *** 111.9% *** 56.2% ** 54.3% *** 19.1% *** –1.3% 49.0% *** 19.0% *** 27.6% *** 41.1% *** –14.4% *** 9.8% 28.3% ***
Age 20–24 8.5% ** 145.0% *** 60.2% 18.3% –23.4% * –1.7% –8.1% –10.3% 97.8% ** –15.0% 107.7% *** –35.1% * 0.8%
Age 25–29 14.6% *** 230.7% *** 87.9% 37.4% ** –22.5% –3.3% –7.6% –1.7% 131.6% *** –9.7% 119.0% *** –35.4% 7.4%
Age 30–34 26.2% *** 258.6% *** 123.2% 59.0% *** –13.0% 12.6% –2.9% 3.0% 182.4% *** 4.9% 149.4% *** –30.7% 16.8%
Age 35–39 31.7% *** 252.2% *** 125.2% 59.5% *** –10.9% 16.8% 5.0% 14.0% 171.8% *** 12.2% 179.3% *** –29.6% 22.8% *
Age 40–44 31.7% *** 310.8% *** 118.8% 62.1% *** –7.8% 21.0% 7.3% 9.6% 158.8% *** 8.1% 192.4% *** –29.2% 15.8%
Age 45–49 31.8% *** 252.9% *** 127.5% 59.8% *** –4.7% 28.8% 3.6% 10.8% 171.6% *** 4.2% 201.0% *** –25.8% 16.4%
Age 50–54 26.1% *** 278.5% *** 113.8% 57.9% *** –11.9% 13.9% 1.0% 9.0% 154.7% *** –4.1% 195.6% *** –29.2% 10.0%
Age 55–59 22.8% *** 252.2% *** 118.4% 49.8% ** –13.5% 13.5% –3.1% 0.8% 179.8% *** –0.7% 174.0% *** –35.5% 8.3%
Age 60–64 10.1% *** 146.5% *** 85.2% 29.7% * –22.9% 6.0% –9.9% * –1.6% 168.0% *** –14.0% 109.6% *** –30.0% –10.6%
Upper Secondary 11.7% *** –1.6% 15.6% *** 32.3% *** 12.1% *** 13.8% *** 4.8% * 2.3% 33.6% *** 8.8% * 22.8% *** 18.6% *** 8.0% ***
Tertiary 48.0% *** 12.3% 35.7% *** 57.8% *** 44.2% *** 41.2% *** 40.8% *** 23.7% *** 35.4% *** 40.1% *** 150.9% *** 53.7% *** 45.5% ***
Urban 17.4% *** –48.6% *** 20.0% *** 31.4% *** 19.8% *** 14.0% *** 17.7% *** 13.8% *** –6.7% 22.3% *** –9.3% ** 13.2% *** 11.9% ***
Private Sector –1.9% *** –11.6% *** 14.5% * 22.8% ** 1.6% –18.7% *** –3.8% –2.1% 14.6% *** –5.4% *** 0.4% –7.0% *** 3.5% **
Total Number of Observations 115,431 116,014 116,096 116,085 116,098 116,070 116,067 116,071 116,076 115,996 115,963 116,066 116,072
Observations in Earnings Model 69,589 5,056 3,584 3,212 3,097 5,381 7,189 7,499 2,628 8,689 11,803 4,612 6,839
Note: Differences from comparison group are calculated as exp(coefficient) minus 1. In addition to the variables shown, the wage model includes control variables for regions. The reference categories are female,
age 15–19, lower secondary education and below, rural residency and public sector. The model for selection into wage employment in the given sector excludes the private sector indicator but includes a set of
indicators for household size (1 person to 10 or more members).
*** indicates statistical significance at the 1 percent level, ** indicates statistical significance at the 5 percent level, * indicates statistical significance at the 10 percent level.
5/31/17 12:19 PM
Table D2
Relative expected earnings by education level, sector and region (percent above/below national average for education level)
Tertiary
Finance, Health
Transportation Insurance Public and

Public and and Real Administration Social Other
Overall Agriculture Mining Manufacturing Utilities Construction Commerce Communication Estate Services Education Services Services
Akmola –30 –88 –35 –49 29 40 28 43 118 7 –58 –20 4
Aktobe 9 –93 –14 –37 52 68 83 73 88 22 –53 2 42
Almaty –23 –92 –56 –46 35 68 68 44 84 23 –57 –10 35
Atyrau 33 –89 24 6 83 88 42 72 124 25 –55 0 35
West Kazakhstan –16 –92 –2 –41 31 52 30 43 119 13 –55 –3 17
Jambyl –25 –90 –43 –49 33 50 39 41 74 22 –57 –6 18
Karaganda 3 –93 –6 –21 63 84 35 60 94 24 –59 –2 40
Kostanay –26 –84 –27 –52 31 55 18 53 143 22 –59 –2 35
Kyzylorda –10 –93 –34 –50 16 8 15 40 99 24 –58 –9 3
Mangystau 63 –94 50 2 101 143 117 132 145 37 –48 11 80
South Kazakhstan –24 –90 –27 –53 43 40 36 44 90 21 –55 –9 23
Pavlodar –9 –92 –28 –34 39 75 29 46 122 24 –53 –5 38
North Kazakhstan –38 –90 –29 –56 33 32 12 43 103 17 –56 –23 3
East Kazakhstan –24 –93 –27 –37 36 30 13 36 70 15 –63 –9 19
Astana City 70 –92 –35 –46 134 107 100 110 144 85 –53 23 56
Almaty City 53 –93 22 –13 81 98 89 76 94 52 –53 13 61
Upper Secondary
Finance, Health
Akmola –24 –86 –24 –41 40 53 32 62 187 16 –73 –14 5
Aktobe 17 –92 0 –28 64 84 59 97 148 32 –70 9 44
Almaty –18 –90 –49 –38 46 84 74 63 143 33 –73 –4 37
Atyrau 44 –87 44 23 98 107 47 95 196 35 –71 7 37
West Kazakhstan –10 –90 14 –32 42 67 35 62 189 22 –71 4 18
Jambyl –21 –88 –34 –41 44 65 44 60 129 31 –72 0 19
Karaganda 11 –91 10 –8 76 102 40 81 155 34 –73 56 42
Kostanay –20 –82 –15 –45 41 70 22 74 220 32 –74 5 36
Kyzylorda –5 –92 –24 –42 25 19 20 59 162 34 –73 –3 4
Mangystau 77 –93 75 18 117 166 125 163 223 48 –67 19 81
(continued)
53
5/31/17 12:19 PM
54
Table D3
Relative expected earnings by education level, sector and region (percent above/below national average for education level) (Continued)
Upper Secondary

Finance, Health
South Kazakhstan –20 –88 –15 –45 54 54 41 64 151 31 –71 –3 24
Pavlodar –2 –90 –16 –24 50 92 34 66 192 34 –70 2 40
North Kazakhstan –35 –88 –18 –49 44 45 16 62 168 27 –72 –17 4
East Kazakhstan –18 –92 –15 –27 47 43 18 55 125 24 –76 –3 20
Astana City 86 –90 –24 –37 152 127 108 139 222 100 –70 32 58
Almaty City 65 –92 42 0 96 117 96 99 155 65 –70 21 63
Lower Secondary
Finance, Health
Akmola –29 –92 –52 –60 60 45 49 80 37 25 –86 7 5
Aktobe 14 –96 –37 –51 88 75 78 118 18 42 –85 36 44
Almaty –19 –95 –68 –58 67 75 95 81 16 43 –86 21 38
Atyrau 38 –93 –10 –16 127 96 65 116 41 46 –86 33 37
West Kazakhstan –14 –95 –28 –54 62 58 52 80 37 31 –85 30 19
Jambyl –21 –93 –58 –60 65 57 62 77 9 42 –86 26 20
Karaganda 7 –95 –31 –38 101 92 57 101 22 45 –87 31 43
Kostanay –24 –90 –47 –62 62 61 37 93 52 42 –87 31 37
Kyzylorda –5 –96 –52 –61 44 13 34 76 25 44 –86 22 5
Mangystau 65 –96 10 –20 148 153 152 192 53 60 –83 48 82
South Kazakhstan –21 –94 –47 –63 77 46 58 82 19 41 –85 21 25
Pavlodar –6 –95 –47 –48 72 82 51 84 39 45 –85 27 41
North Kazakhstan –37 –94 –48 –65 65 37 30 80 27 36 –86 3 4
East Kazakhstan –21 –96 –46 –50 69 36 32 71 7 34 –88 22 21
Astana City 80 –95 –52 –57 189 115 133 165 53 115 –85 65 58
Almaty City 59 –95 –11 –32 124 106 120 121 22 77 –85 52 64
5/31/17 12:19 PM
Figure D1
Expected wages by region and education level, 2013
100
80
60
40
20
–20
–40
–60
be
au
an
ay
an
ar
an
an
ty
ty
a
by
at
nd
rd
ta
ol
Ci
Ci
od
an
to
yr
st
st
st
m
m
m
hs
lo
s
ga
gy
kh
kh
kh
At
na
y
Ak
vl
st
Ja
Al
Ak
zy
ak
at
ra
Pa
Ko
an
za
za
za
ta
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az
Ka
Ka
Ka
Ka
As
M
Al
tK
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ut
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W
No
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Lower secondary and less Upper secondary Tertiary
Figure D2
Wage distributions relative to the national average, overall and by sector, 2013
.15 .15
.1 .1
.05 .05
0 0
–10 –5 0 5 10 –10 –5 0 5 10
Log (wage income) relative to national average) Log (wage income) relative to national average)
Overall Public utilities Manufacturing

Mining Agriculture Construction Overall Commerce
Transportation and communication Financial, insurance
and real estate
Public administration services
Education
Health and social services
Other services
55

References
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ington, DC: World Bank.
———. 2014. Strengthening Kazakhstan’s Education System. Washington, DC: World Bank.
———. 2015. World Bank Biannual Economic Update. Washington, DC: World Bank.
———. 2016. Kazakhstan: Towards Development of a Jobs Strategy. Washington, DC: World Bank.
56

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Achievements and Remaining Challenges

1701501_Kazakhstan Labor Market.indd 1 6/2/17 12:07 PM

Rights and Permissions

1701501_Kazakhstan Labor Market.indd 2 5/31/17 12:19 PM

2. Jobs and Productivity 3

3. Demographics and Labor Market Outcomes 7

5. Challenges Ahead and Policy Implications 30

Annex A: Additional Tables and Graphs................................................................................................................. 32

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1701501_Kazakhstan Labor Market.indd 1 5/31/17 12:19 PM

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5% (" # Kyrgyz Republic

Source: Authors’ calculations using World Development Indicators.

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Labor force growth (annual %), 2003–2013

Total employed growth (annual %), 2003–2013

Source: Authors’ calculations using World Development Indicators.

Wholesale and retail trade

Agriculture, forestry and fishing

0.0 (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5

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Period: 2003 to 2013

1701501_Kazakhstan Labor Market.indd 5 5/31/17 12:19 PM

Period: 2003 to 2013

Real estate activities

0.4 Financial & insurance

Change in employment share, 2003–2013

Source: Authors’ calculations using data from Statistical Committee of RK.

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1701501_Kazakhstan Labor Market.indd 7 5/31/17 12:19 PM

United States Chile

Russian Federation Latvia

0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80%

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Employment Unemployment Inactivity NEET Employment Unemployment Inactivity

y/y LF increase, left axis Cumulative LF increase, right axis

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Source: Economic Research Institute.

Employment and Unemployment

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0% Youth unemployment rate, % (15–24 years)

Overall Male Female Urban Rural Long- term unemployment, %

Employment Unemployment Inactive Source: Statistical Committee of RK.

Note: Working age = 15–64 years of age.

Source: Authors’ calculations using LFS 2013.

Source: Authors’ calculations using LFS 2013.

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Wage Employee Informal:

Source: Authors’ calculations using LFS 2013.

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Employer Farmstead worker

Source: Authors’ calculations using LFS 2013.

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Share of Share of Percent

Source: Authors’ calculations using LFS 2013.

Determinants of Activity and Employment Type

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–40.00 –30.00 –20.00 –10.00 0.00 10.00 20.00 30.00 40.00

Private formal wage employment Public wage employment

Source: Authors’ calculations using LFS 2013.

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