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Sectoral Selection and Informality: a Nicaraguan Case Study

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  • Michael J. Pisani
  • José A. Pagán

Abstract

Using microdata from the 1998 and 1993 Nicaraguan Living Standards Measurement Survey, this paper analyzes the relative size and attractiveness of formal and informal sector employment. Switching regression models of the formal/informal sector employment choice indicate that education across years and gender are the primary determinants of formal sector participation. Furthermore, the formal sector is characterized by positive selection. The results for the informal sector are less definitive, but are also suggestive of positive selection. These findings imply that the informal and formal sectors in Nicaragua contribute positively to the overall economy by attracting those individuals best suited for (in)formal sector employment. Copyright Blackwell Publishing Ltd 2004..

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 8 (2004)
Issue (Month): 4 (November)
Pages: 541-556

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Handle: RePEc:bla:rdevec:v:8:y:2004:i:4:p:541-556

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1363-6669

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Cited by:
  1. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
  2. Camilo Mondragón-Vélez & Ximena Peña, 2010. "Business Ownership and Self-Employment in Developing Economies: The Colombian Case," NBER Chapters, in: International Differences in Entrepreneurship, pages 89-127 National Bureau of Economic Research, Inc.
  3. Dario Pozzoli & Marco Ranzani, 2010. "Participation and sector selection in Nicaragua," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(5), pages 591-610.
  4. Jonasson, Erik, 2009. "Informal Employment and the Role of Regional Governance," Working Papers 2009:10, Lund University, Department of Economics, revised 27 Sep 2010.
  5. Bingqin Li & Huamin Peng, 2006. "The Social Protection of Rural Workers in the Construction Industry in Urban China," CASE Papers case113, Centre for Analysis of Social Exclusion, LSE.
  6. Marisa Bucheli & Rodrigo Ceni, 2007. "Informality: Sectoral Selection and Earnings in Uruguay," Documentos de Trabajo (working papers) 2007, Department of Economics - dECON.
  7. Bingqin Li & Huamin Peng, 2006. "The social protection of rural workers in the construction industry in urban China," LSE Research Online Documents on Economics 6226, London School of Economics and Political Science, LSE Library.
  8. Henley, Andrew & Arabsheibani, G. Reza & Carneiro, Francisco G., 2009. "On Defining and Measuring the Informal Sector: Evidence from Brazil," World Development, Elsevier, vol. 37(5), pages 992-1003, May.
  9. Mandelman, Federico S. & Montes-Rojas, Gabriel V., 2009. "Is Self-employment and Micro-entrepreneurship a Desired Outcome?," World Development, Elsevier, vol. 37(12), pages 1914-1925, December.
  10. Arabsheibani, Reza & Staneva, Anita V., 2012. "Is There an Informal Employment Wage Premium? Evidence from Tajikistan," IZA Discussion Papers 6727, Institute for the Study of Labor (IZA).

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