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Informal employment and happiness: Model with endogenous regressors

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  • 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)

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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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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  1. 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.
  2. 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.
  3. 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.
  4. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
  5. Gorana Krstic & Peter Sanfey, 2007. "Mobility, poverty and well-being among the informally employed in Bosnia and Herzegovina," Working Papers 101, European Bank for Reconstruction and Development, Office of the Chief Economist.
  6. 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.
  7. Marcouiller, Douglas & Ruiz de Castilla, Veronica & Woodruff, Christopher, 1997. "Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 367-92, January.
  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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