Informal sector: The credit market channel

Straub, Stéphane

doi:10.1016/j.jdeveco.2004.09.005

Cited by 296 publications

(206 citation statements)

References 30 publications

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“…Two other interesting and related papers are Straub (2005) and de Paula and Scheinkman (2006). Straub (2005) develops a model where formal firms pay an entry fee to become formal.…”

Section: Literature Reviewmentioning

confidence: 99%

Modeling Informality Formally: Households and Firms

Galiani

Weinschelbaum

2006

SSRN Journal

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Informality is widespread in most developing countries. In Latin America, 50 percent of salaried employees work informally. Three stylized facts characterize informality: 1) small firms tend to operate informally while large firms tend to operate formally; 2) unskilled workers tend to be informal while skilled ones have formal jobs; 3) Ceteris paribus, secondary workers are less likely to operate formally than primary workers. We develop a model that account for all these facts. In our model both heterogeneous firms and workers have preferences over the sector they operate and choose optimally whether to function formally or informally. There are two labor markets, one formal and the other informal, and both firms and workers act unconstrained in them. By contrast, a prominent feature of the pre-existing literature is the idea that worker's decisions play no role in determining the equilibrium of the economy. Using our model, we show that an increase in the participation of secondary workers would tend to raise the level of informality in the economy. This effect partially accounts for the increases in informality seen in Latin America over the past two decades.

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“…Two other interesting and related papers are Straub (2005) and de Paula and Scheinkman (2006). Straub (2005) develops a model where formal firms pay an entry fee to become formal.…”

Section: Literature Reviewmentioning

confidence: 99%

Modeling Informality Formally: Households and Firms

Galiani

Weinschelbaum

2006

SSRN Journal

View full text Add to dashboard Cite

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“…44 Binnendijk et al (2013). 45 Narayan et al (2000a, b);Straub (2005). 46 Doherty and Schlesinger (1991).…”

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confidence: 98%

The Demand for (Micro) Health Insurance in the Informal Sector

Dror

Firth

2014

Geneva Pap Risk Insur Issues Pract

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We identify the need for a theory of demand for health insurance suited to the informal sector in low-and middle income countries (LMIC) where some 3 billion people lack health cover. Excluded from formal governance structures, they rely on informal arrangements by which rulesin-use shape choices, behaviours and decisions. We explore the fundamental assumptions of standard economic theories of demand for health insurance in the light of arguments from the literature and field evidence. We show that the assumptions are largely inconsistent with the context of poverty and informality. And we propose a new theory based on assumptions better suited to the context of informality and poverty. Our major conclusion is that, in order to grow the demand for health insurance in the informal sector in LMIC, it is first necessary to strengthen ground-up governance consistent with group-based decision-making under local conditions.

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“…As access to credit worsens, a range of mid-size firms (those just above A L ) are prevented from investing in generators. Unsurprisingly, this is more 12 Alternatively, one could consider that lenders recoup only a fraction of their loan, for example because of failures in the justice system, as in Straub (2005), and let this parameter vary. Qualitative results would be similar.…”

Section: Proposition 2 the Minimum Level Of Initial Assets A* Above Wmentioning

confidence: 99%