Women’s Participation to Self-employment and Informal Sector
Article Sidebar
Published
Sep 26, 2017
Main Article Content
Abstract
Using comparable micro-level data from three countries, we ask what type of person works in the informal sector and whether informal workers earn lower wages than observationally equivalent workers in the formal sector. The characteristics of informal workers are similar across countries. Surprisingly, when we control for these personal characteristics, we find a significant wage premium associated with formal employment. A model of endogenous selection offers little help in explaining the differences in wage patterns. The research casts doubt on the received wisdom that the informal sector, always and everywhere, is a poorly-paid but easily-entered refuge for those who have no other employment opportunities.
Article Details
Section
Articles
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Once the manuscript is accepted for publication, authors shall transfer the copyright to the publisher. If the submitted manuscript is not accepted for printing by the journal, the authors shall retain all their rights. The following rights on the manuscript are transferred to the publisher, including any supplementary materials and any parts, extracts or elements of the manuscript:
- the right to reproduce and distribute the manuscript in printed form, including print-on-demand;
- the right to print prepublications, reprints and special editions of the manuscript;
- the right to translate the manuscript into other languages;
- the right to reproduce the manuscript using photomechanical or similar means including, but not limited to photocopy, and the right to distribute these copies;
- the right to reproduce and distribute the manuscript electronically or optically using and all data carriers or storage media, and especially in machine readable/digitalized form on data carriers such as hard drive, CD-ROM, DVD, Blu-ray Disc (BD), Mini Disc, data tapes, and the right to reproduce and distribute the article via these data carriers;
- the right to store the manuscript in databases, including online databases, as well as the right to transmit the manuscript in all technical systems and modes;
- the right to make the manuscript available to the public or to closed user groups on individual demand, for use on monitors or other readers (including e-books), and in printable form for the user, either via the Internet, online service, or via internal or external networks.
Authors reserve the copyright to published articles and have the right to use the article in the same manner like third parties in accordance with the licence Attribution-Non-Commercial-Non-Derivate 4.0 International (CC BY NC ND). Thereby they must quote the basic bibliographic data of the source article published in the journal (authors, article title, journal title, volume, pagination).
References
[1] Assaad, R. (1997). Explaining Informality: The Determinants of Compliance with Labor Market Regulations in Egypt. Paper presented at the Economic Research Forum, Fourth Annual Conference in Beirut, Lebanon
[2] Blinder, A.S. (1974). Wage Discrimination: Reduced Form and Structural Estimates.. Journal of Human Resources, 8(4): 436-455.
[3] Becker, G.S. (1975). Human Capital. Second edition, National Bureau of Economic Research, New York: Columbia University Press.
[4] Bernhardt, I. (1994).Comparative advantage in Self-Employment and Paid Work. Canadian Journal of Economics, 27: 273-289.
[5] Bulutay, T. (1997). İşgücü Piyasasõ Bilgi Danõşma Kurulu Raporu. (Report of the Information Commission on Labor Market) In T. Bulutay, ed. İmalat Sanayiinde İstihdam (Employment in the Manufacturing Sector) 267-308, Ankara:State Institute of Statistics.
[6] Bernhardt, Irwin, “Comparative Advantage in Self-Employment and Paid Work,” Canadian Journal of Economics, Vol. 27, No.2, May, 1994, pp. 273-289.
[7] Brown, Charles, and Medoff, James, "The Employer Size--Wage Effect,"Journal of Political Economy, Vol.97, No.5, October, 1989, pp.1027-1059.
[8] Castells, M. and A. Portes, (1989) .World Underneath: The Origins, Dynamics and Effects of the Informal Economy. In A. Portes, M. Castells and L.A. Benton, eds., The Informal Economy: Studies in Advanced and Less Developed Countries, 11-37. Baltimore: The Johns Hopkins University Press.
[9] Castells, Manuel, and Portes, Alejandro (1989). "World Underneath: The Origins, Dynamics, and Effects of the Informal Economy," in Alejandro Portes, Manuel Castells, and Lauren Benton, eds., The Informal Economy: Studies in Advanced and Less Developed Countries, Baltimore: Johns
[10] Esfahani, H.S. and D. Salehi-Isfahani (1989). Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism. Economic Journal, 99 (September): 818-836.
[11] Evans, D.S. and B. Jovanovic, (1989). An Estimated Model of Entrepreneurial Choice under Liquidity Constraints. Journal of Political Economy, 97(4): 808-827.
[12] Fields, G.S., (1994). Changing Labor Market Conditions and Economic Development in Hong Kong, the Republic of Korea, Singapore, Taiwan and China.. The World Bank Economic Review, 8(3): 395-414.
[13] Fields, Gary S., (1975) "Rural-Urban Migration, Urban Unemployment and Underemployment, and JobSearch Activity in LDC's," Journal of Development Economics, Vol.2, No.2, pp.165- 187.
[14] Fields, Gary S., (1990) "Labour Market Modelling and the Urban Informal Sector: Theory and Evidence," in David Turnham, Bernard Salome, and Antoine Schwarz,eds., The Informal Sector Revisited. Paris: OECD Development Centre, pp.49-69.
[15] Funkhouser, Edward. (1994) “The Urban Informal Sector in Central America: Household Survey Evidence,” Working Paper in Economics #23-94, Department of Economics, University of California, Santa Barbara.
[16] Gindling, T. H.,(1991) “Labor Market Segmentation and the Determination of Wages in the Public,Private-Formal, and Informal Sectors in San José, Costa Rica, ”Economic Development and Cultural Change, pp. 585-605.
[17] Hall, Bronwyn H., Times Series Processor Version 4.2 User’s Guide (Palo Alto: TSP International, February 1993).
[18] Harris, John, and Todaro, Michael, (1970)"Migration, Unemployment, and Development: A Two- Sector Model,” American Economic Review, Vol.60, No.1, pp.126-142.
[19] Hart, Keith,(1973) "Informal Income Opportunities and Urban Employment in Ghana," Journal of Modern African Studies, Vol.11, No.1, pp.61-89.
[20] Heckman, James J., and Hotz, V. Joseph, (1986)“An Investigation of the Labor Market Earnings of Panamanian Males: Evaluating Sources of Inequality,” The Journal of Human Resources, Vol. 21, No. 4, pp.509-542.
[21] Hopkins University Press, (1989), de Soto, Hernando, The Other Path: The Invisible Revolution in the Third World, translated by June Abbott, New York: pp.11-40
[22] Dickens, William T., and Lang, Kevin,(1985) “A Test of Dual Labor Market Theory,” American Economic Review, Vol. 75, No. 4, September, pp. 792-805.
[23] International Labor Organization (ILO), Employment, Incomes, and Equality: A Strategy for Increasing Productive Employment in Kenya, Geneva: ILO, 1972.
[24] Harris, J.R. and M.P. Todaro, (1970). Migration, Unemployment and Development: A Two-Sector Analysis. American Economic Review, 60(1): 126-142.
[25] Gill, A.M., (1988). Choice of Employment Status and the Wage Employees and the Self-Employed: Some Further Evidence. Journal of Applied Econometrics, 3: 229-234.
[26] Gindling, T.H. (1991). Labor Market Segmentation and the Determination of Wages in the Public, Private-Formal and Informal Sectors in San Jose, Costa Rica.Economic Development and Cultural Change, 39(3): 585-605.
[27] Heckman, J.J. (1974). Shadow Prices, Market Wages and Labor Supply. Econometrica, 42: 679-694.
[28] Heckman, J. and V.J. Hotz (1986). The Sources of Inequality for Males in Panama.
[29] Kuznets, S. (1971). Economic Growth of Nations, Total Output and Production Structure. Cambridge, Massachusetts: Harvard University Press.
[30] Lee, L.F. (1983). Generalized Econometric Models with Selectivity. Econometrica, 51:507-512.
[31] King, Elizabeth,(1990) "Does Education Pay in the Labor Market? The Labor Force Participation, Occupation, and Earnings of Peruvian Women," LSMS Working Paper#67, Washington, DC: The World Bank Labor Markets.. The Journal of Human Resources, 21(4): 507-542. Idson,T. and D.
[32] Feaster. (1990). A Selectivity Model of Employer-Size Wage Differentials. Journal of Labor Economics, 8(1): 99-122.
[33] Magnac, T.H. (1991). Segmented or Competitive Labor Markets.Econometrica, 59: 165-187.
[34] Marcoiller, D.V., Ruiz de Castilla and C. Woodruff, (1997). Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador and Peru. Economic Development and Cultural Change, 45: 711-749.
[35] Radovic, Markovic M. et.al. (2010) “Female Employment in Formal and Informal Sectors of the Serbian Economy”. Journal of Women’s Entrepreneurship and Education, No.3-4:18-27.
[2] Blinder, A.S. (1974). Wage Discrimination: Reduced Form and Structural Estimates.. Journal of Human Resources, 8(4): 436-455.
[3] Becker, G.S. (1975). Human Capital. Second edition, National Bureau of Economic Research, New York: Columbia University Press.
[4] Bernhardt, I. (1994).Comparative advantage in Self-Employment and Paid Work. Canadian Journal of Economics, 27: 273-289.
[5] Bulutay, T. (1997). İşgücü Piyasasõ Bilgi Danõşma Kurulu Raporu. (Report of the Information Commission on Labor Market) In T. Bulutay, ed. İmalat Sanayiinde İstihdam (Employment in the Manufacturing Sector) 267-308, Ankara:State Institute of Statistics.
[6] Bernhardt, Irwin, “Comparative Advantage in Self-Employment and Paid Work,” Canadian Journal of Economics, Vol. 27, No.2, May, 1994, pp. 273-289.
[7] Brown, Charles, and Medoff, James, "The Employer Size--Wage Effect,"Journal of Political Economy, Vol.97, No.5, October, 1989, pp.1027-1059.
[8] Castells, M. and A. Portes, (1989) .World Underneath: The Origins, Dynamics and Effects of the Informal Economy. In A. Portes, M. Castells and L.A. Benton, eds., The Informal Economy: Studies in Advanced and Less Developed Countries, 11-37. Baltimore: The Johns Hopkins University Press.
[9] Castells, Manuel, and Portes, Alejandro (1989). "World Underneath: The Origins, Dynamics, and Effects of the Informal Economy," in Alejandro Portes, Manuel Castells, and Lauren Benton, eds., The Informal Economy: Studies in Advanced and Less Developed Countries, Baltimore: Johns
[10] Esfahani, H.S. and D. Salehi-Isfahani (1989). Effort Observability and Worker Productivity: Towards an Explanation of Economic Dualism. Economic Journal, 99 (September): 818-836.
[11] Evans, D.S. and B. Jovanovic, (1989). An Estimated Model of Entrepreneurial Choice under Liquidity Constraints. Journal of Political Economy, 97(4): 808-827.
[12] Fields, G.S., (1994). Changing Labor Market Conditions and Economic Development in Hong Kong, the Republic of Korea, Singapore, Taiwan and China.. The World Bank Economic Review, 8(3): 395-414.
[13] Fields, Gary S., (1975) "Rural-Urban Migration, Urban Unemployment and Underemployment, and JobSearch Activity in LDC's," Journal of Development Economics, Vol.2, No.2, pp.165- 187.
[14] Fields, Gary S., (1990) "Labour Market Modelling and the Urban Informal Sector: Theory and Evidence," in David Turnham, Bernard Salome, and Antoine Schwarz,eds., The Informal Sector Revisited. Paris: OECD Development Centre, pp.49-69.
[15] Funkhouser, Edward. (1994) “The Urban Informal Sector in Central America: Household Survey Evidence,” Working Paper in Economics #23-94, Department of Economics, University of California, Santa Barbara.
[16] Gindling, T. H.,(1991) “Labor Market Segmentation and the Determination of Wages in the Public,Private-Formal, and Informal Sectors in San José, Costa Rica, ”Economic Development and Cultural Change, pp. 585-605.
[17] Hall, Bronwyn H., Times Series Processor Version 4.2 User’s Guide (Palo Alto: TSP International, February 1993).
[18] Harris, John, and Todaro, Michael, (1970)"Migration, Unemployment, and Development: A Two- Sector Model,” American Economic Review, Vol.60, No.1, pp.126-142.
[19] Hart, Keith,(1973) "Informal Income Opportunities and Urban Employment in Ghana," Journal of Modern African Studies, Vol.11, No.1, pp.61-89.
[20] Heckman, James J., and Hotz, V. Joseph, (1986)“An Investigation of the Labor Market Earnings of Panamanian Males: Evaluating Sources of Inequality,” The Journal of Human Resources, Vol. 21, No. 4, pp.509-542.
[21] Hopkins University Press, (1989), de Soto, Hernando, The Other Path: The Invisible Revolution in the Third World, translated by June Abbott, New York: pp.11-40
[22] Dickens, William T., and Lang, Kevin,(1985) “A Test of Dual Labor Market Theory,” American Economic Review, Vol. 75, No. 4, September, pp. 792-805.
[23] International Labor Organization (ILO), Employment, Incomes, and Equality: A Strategy for Increasing Productive Employment in Kenya, Geneva: ILO, 1972.
[24] Harris, J.R. and M.P. Todaro, (1970). Migration, Unemployment and Development: A Two-Sector Analysis. American Economic Review, 60(1): 126-142.
[25] Gill, A.M., (1988). Choice of Employment Status and the Wage Employees and the Self-Employed: Some Further Evidence. Journal of Applied Econometrics, 3: 229-234.
[26] Gindling, T.H. (1991). Labor Market Segmentation and the Determination of Wages in the Public, Private-Formal and Informal Sectors in San Jose, Costa Rica.Economic Development and Cultural Change, 39(3): 585-605.
[27] Heckman, J.J. (1974). Shadow Prices, Market Wages and Labor Supply. Econometrica, 42: 679-694.
[28] Heckman, J. and V.J. Hotz (1986). The Sources of Inequality for Males in Panama.
[29] Kuznets, S. (1971). Economic Growth of Nations, Total Output and Production Structure. Cambridge, Massachusetts: Harvard University Press.
[30] Lee, L.F. (1983). Generalized Econometric Models with Selectivity. Econometrica, 51:507-512.
[31] King, Elizabeth,(1990) "Does Education Pay in the Labor Market? The Labor Force Participation, Occupation, and Earnings of Peruvian Women," LSMS Working Paper#67, Washington, DC: The World Bank Labor Markets.. The Journal of Human Resources, 21(4): 507-542. Idson,T. and D.
[32] Feaster. (1990). A Selectivity Model of Employer-Size Wage Differentials. Journal of Labor Economics, 8(1): 99-122.
[33] Magnac, T.H. (1991). Segmented or Competitive Labor Markets.Econometrica, 59: 165-187.
[34] Marcoiller, D.V., Ruiz de Castilla and C. Woodruff, (1997). Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador and Peru. Economic Development and Cultural Change, 45: 711-749.
[35] Radovic, Markovic M. et.al. (2010) “Female Employment in Formal and Informal Sectors of the Serbian Economy”. Journal of Women’s Entrepreneurship and Education, No.3-4:18-27.