Poverty measures in developing countries often ignore the distribution of resources within families and the gains from joint consumption. In this paper, we estimate the allocation process and adult economies of scale in households from Côte d'Ivoire using a collective model of household consumption. Identi…cation relies on the observation of adult-speci…c goods, as in the Rothbarth method, and a joint estimation on couples and singles. Results show that children's shares are small and decline quickly with household size. It results that child poverty, measured on the basis of individual allocations within families, is much larger than in traditional measures ignoring intrahousehold inequality. Adult poverty is smaller because parents are highly compensated by the scale economies due to joint consumption.
This paper provides new evidence on the wage gap between informal and formal salary workers in South Africa, Brazil and Mexico. We use rich datasets that allow us to define informality in a relatively comparable fashion across countries. We compute precise wage differentials by accounting for taxes paid in the formal sector. For each country, we analyze how the sector wage gap varies within groups, between groups and over time. To account for unobserved heterogeneity, we use large (unbalanced) panels to estimate fixed effects models at the mean and at different quantiles of the wage distribution. We find that unobserved heterogeneity explains a large part of the (conditional) wage gap. The remaining informal sector wage penalty is large in the lower part of the distribution but almost disappears at the top. The penalty primarily concerns young workers and is found to be procyclical. We carefully investigate the robustness of these results and discuss their policy implications as well as regularities across countries.
JEL Classification:J21, J23, J24, J31, C14, O17
We estimate the conditional earnings gap between formal and informal sectors, distinguishing between salary and self‐employed workers. Rich panel datasets for Brazil, Mexico, and South Africa are assembled to define informality in a comparable way and to control for (time‐invariant) unobserved heterogeneity. Estimations are conducted at different points of the conditional earnings distributions. Interesting results emerge. First, informal salary workers are systematically underpaid compared to their formal sector counterparts, in all countries and at almost all conditional quantiles. Yet penalties are very moderate in Brazil and Mexico while more substantial in South Africa, a country where legal advantages in formal employment are effective. Second, informal self‐employment contributes to a more dispersed earnings distribution in all three countries. International comparisons reveal a continuum of situations reflecting historical and legal differences across countries, from very large self‐employment penalties in South Africa to significant conditional earnings premia in Mexico.
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