Abstract:PurposeThe purpose of this paper is to examine the existence of skill differentiation between formal and informal labor markets.Design/methodology/approachFirst, a theoretical model is developed under the assumption that concealment of production is increasingly costly for informal firms. Second, using data on the Brazilian self‐employed economy, two methods are utilized to compare earnings in the formal versus the informal economy: propensity score and instrumental variable (IV) methods. For the IV estimation… Show more
“…Another feature of the minimum wage changes in Brazil is that, since 1 Firms face a trade-off between the costs of complying with the regulation and the probability/magnitude of punishment. The firms' decision to hire formal versus informal workers was investigated in Almeida and Carneiro (2012), Mattos and Ogura (2009), and Galiani and Weinschelbaum (2012), among many others. 2 The constitution allows for states to set occupation-specific wage floors, as long as they are above the federal level.…”
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
“…Another feature of the minimum wage changes in Brazil is that, since 1 Firms face a trade-off between the costs of complying with the regulation and the probability/magnitude of punishment. The firms' decision to hire formal versus informal workers was investigated in Almeida and Carneiro (2012), Mattos and Ogura (2009), and Galiani and Weinschelbaum (2012), among many others. 2 The constitution allows for states to set occupation-specific wage floors, as long as they are above the federal level.…”
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
“…I maintain all assumptions from Doyle -or Meyer and Wise, if one prefers a parametric specification for latent wages -and generalize their approach to address sector-specific responses. Assumption 4, the assump- 12 The conditions needed for identification under unobserved heterogeneity are discussed in Appendix D.…”
Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.
“…Heckman correction procedures have been used by a number of studies, such as Heckman and Hotz (1986) for Panama, and Marcouiller, Ruiz de Castilla and Woodruff (1997) for three Latin American countries. More recently, Mattos and Ogura (2009) used the proportion of beneficiaries of public pension funds per state as the instrument for selection into formal employment in Brazil. A common finding in these types of studies is that the earnings gap decreases substantially once selection is accounted for.…”
In contrast to the majority of studies that have treated informal workers as a single homogeneous group, this article accounts for the possibility of "winners" and "losers" among informal workers. Applying unconditional quantile regressions to data from the Indonesian Family Life Survey, the authors are able to estimate the formal-informal wage gaps for different segments of the earnings distribution. Although the evidence confirms the existence of a substantial earnings penalty for many informal workers, there is also a group who earn roughly similar incomes to formal workers. The findings are consistent with Fields's (1990 and model of heterogeneous informal employment.
scite is a Brooklyn-based organization that helps researchers better discover and understand research articles through Smart Citations–citations that display the context of the citation and describe whether the article provides supporting or contrasting evidence. scite is used by students and researchers from around the world and is funded in part by the National Science Foundation and the National Institute on Drug Abuse of the National Institutes of Health.