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Informal employment and happiness: Model with endogenous regressors

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Author Info

  • Aistov, Andrey

    ()
    (Higher School of Economics (Nizhnii Novgorod) Russia)

  • Larin, Alexander

    ()
    (Higher School of Economics (Nizhnii Novgorod) Russia)

  • Leonova, Lyudmila

    ()
    (Higher School of Economics (Nizhnii Novgorod) Russia)

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    Abstract

    In the paper relation between the unregistered employment and life satisfaction is investigated. Endogeneity of the employment status and income is described by the system of simultaneous equations with random individual effects. The system is estimated with maximum likelihood on the Russia Longitudinal Monitoring Survey of HSE (RLMS-HSE) data. The key result of the paper is that informal status does not necessary decrease the level of life satisfaction. For example, if income were fixed, men would be more satisfied with their lifes in the unregistered employements in comparison with the registered jobs, ceteris paribus. The same are for women, but only in the cases when earnings are unfixed (they are a bit higher in the unregistered unemployement).

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    File URL: http://pe.cemi.rssi.ru/pe_2012_2_17-36.pdf
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    Bibliographic Info

    Article provided by Publishing House "SINERGIA PRESS" in its journal Applied Econometrics.

    Volume (Year): 26 (2012)
    Issue (Month): 2 ()
    Pages: 17-36

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    Handle: RePEc:ris:apltrx:0169

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    Web page: http://appliedeconometrics.cemi.rssi.ru/

    Related research

    Keywords: informal employment; unregistered employment; life satisfaction; endogeneous income; endogeneous job status; simultaneous equations system; likelihood function; RLMS-HSE; panel data.;

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    References

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    1. V. Gimpelson & A. Zudina., 2011. "Informal Workers in the Russian Economy: Who Are They and How Many?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 10.
    2. Ada Ferrer-i-Carbonell & Paul Frijters, 2002. "How important is Methodology for the Estimates of the Determinants of Happiness?," Tinbergen Institute Discussion Papers 02-024/3, Tinbergen Institute.
    3. Rosa Duarte & José-Julián Escario & José-Alberto Molina, 2007. "Supporting the Endogenous Relationship Between Well-Being and Employment for US Individuals," Atlantic Economic Journal, International Atlantic Economic Society, vol. 35(3), pages 279-288, September.
    4. Klarita G�rxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, 09.
    5. Krstic, Gorana & Sanfey, Peter, 2007. "Mobility, poverty and well-being among the informally employed in Bosnia and Herzegovina," Economic Systems, Elsevier, vol. 31(3), pages 311-335, September.
    6. Douglas Marcouiller, S.J. & Veronica Ruiz de Castilla & Christopher Woodruff, 1995. "Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador, and Peru," Boston College Working Papers in Economics 294., Boston College Department of Economics.
    7. Nattavudh Powdthavee, 2010. "How much does money really matter? Estimating the causal effects of income on happiness," Empirical Economics, Springer, vol. 39(1), pages 77-92, August.
    8. Paul Frijters & Ingo Geishecker & John P. Haisken-DeNew & Michael A. Shields, 2006. "Can the Large Swings in Russian Life Satisfaction be Explained by Ups and Downs in Real Incomes?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(3), pages 433-458, October.
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