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No Education, No Good Jobs? Evidence on the Relationship between Education and Labor Market Segmentation

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Author Info
Carmen Pagés-Serra ()
Marco Stampini

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Abstract

This paper assesses labor market segmentation across formal and informal salaried jobs and self-employment in three Latin American and three transition countries. It looks separately at the markets for skilled and unskilled labor, inquiring if segmentation is an exclusive feature of the latter. Longitudinal data are used to assess wage differentials and mobility patterns across jobs. To study mobility, the paper compares observed transitions with a new benchmark measure of mobility under the assumption of no segmentation. It finds evidence of a formal wage premium relative to informal salaried jobs in the three Latin American countries, but not in transition economies. It also finds evidence of extensive mobility across these two types of jobs in all countries, particularly from informal salaried to formal jobs. These patterns are suggestive of a preference for formal over informal salaried jobs in all countries. In contrast, there is little mobility between self-employment and formal salaried jobs, suggesting the existence of barriers to this type of mobility or a strong assortative matching according to workers’ individual preferences. Lastly, for both wage differentials and mobility, there is no statistical difference across skill levels, indicating that the markets for skilled and unskilled labor are similarly affected by segmentation.

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Paper provided by Inter-American Development Bank, Research Department in its series RES Working Papers with number 4561.

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Date of creation: Nov 2007
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Handle: RePEc:idb:wpaper:4561

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bartelsman, Eric & Haltiwanger, John & Scarpetta1, Stefano, 2004. "Microeconomic evidence of creative destruction in industrial and developing countries," Policy Research Working Paper Series 3464, The World Bank. [Downloadable!]
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  2. Gong, Xiaodong & Van Soest, Arthur & Villagomez, Elizabeth, 2004. "Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 53(1), pages 1-36, October.
    Other versions:
  3. Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 289-314, January.
  4. Bigsten, Arne & Mengistae, Taye & Shimeles, Abebe, 2007. "Mobility and earnings in Ethiopia's urban labor markets, 1994-2004," Policy Research Working Paper Series 4168, The World Bank. [Downloadable!]
  5. Mariano Bosch & William Maloney, 2007. "Comparative Analysis of Labor Market Dynamics Using Markov Processes: An Application to Informality," IZA Discussion Papers 3038, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January. [Downloadable!] (restricted)
  7. Bosch, Mariano & Maloney, William, 2007. "Comparative analysis of labor market dynamics using markov processes : an application to informality," Policy Research Working Paper Series 4429, The World Bank. [Downloadable!]
  8. Benoit Dostie & David Sahn, 2006. "Labor Market Dynamics in Romania During a Period of Economic Liberalization," Cahiers de recherche 06-17, HEC Montréal, Institut d'économie appliquée, revised Jun 2008. [Downloadable!]
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  9. Sorm, Vit & Terrell, Katherine, 2000. "Sectoral Restructuring and Labor Mobility: A Comparative Look at the Czech Republic," IZA Discussion Papers 111, Institute for the Study of Labor (IZA). [Downloadable!]
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  10. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September. [Downloadable!] (restricted)
  11. Tito Boeri & Christopher J. Flinn, 1999. "Returns to Mobility in the Transition to a Market Economy," William Davidson Institute Working Papers Series 217, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
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  12. James Albrecht & Lucas Navarro & Susan Vroman, 2006. "The Effects of Labor Market Policies in an Economy with an Informal Sector," IZA Discussion Papers 2141, Institute for the Study of Labor (IZA). [Downloadable!]
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  13. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Gross worker and job flows in a transition economy: an analysis of Estonia," Labour Economics, Elsevier, vol. 9(5), pages 601-630, November. [Downloadable!] (restricted)
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  14. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 397-415, July. [Downloadable!] (restricted)
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  15. P R Agénor, 2005. "The Analytics of Segmented Labor Markets," Centre for Growth and Business Cycle Research Discussion Paper Series 52, Economics, The Univeristy of Manchester. [Downloadable!]
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  16. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, Oxford University Press, vol. 13(2), pages 275-302, May.
  17. Suzanne Duryea & Carmen Pagés-Serra, 2002. "Human Capital Policies: What they Can and Cannot Do for Productivity and Poverty Reduction in Latin America," RES Working Papers 4297, Inter-American Development Bank, Research Department. [Downloadable!]
  18. Bosch, Mariano & Maloney, William, 2005. "Labor market dynamics in developing countries: comparative analysis using continuous time Markov processes," Policy Research Working Paper Series 3583, The World Bank. [Downloadable!]
  19. Mariano Bosch & William Maloney, 2007. "Gross Worker Flows in the Presence of Informal Labor Markets: Evidence from Mexico, 1987-2002," IZA Discussion Papers 2864, Institute for the Study of Labor (IZA). [Downloadable!]
  20. Yemtsov, Ruslan, 2001. "Labor Markets, Inequality and Poverty in Georgia," IZA Discussion Papers 251, Institute for the Study of Labor (IZA). [Downloadable!]
  21. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier. [Downloadable!] (restricted)
  22. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, December.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sabine Bernab? & Marco Stampini, 2008. "Labour mobility during transition: evidence from Georgia," LICOS Discussion Papers 20608, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  2. Carmen Pages & Lucia Madrigal, 2008. "Is Informality a Good Measure of Job Quality? Evidence from Job Satisfaction Data," RES Working Papers 4603, Inter-American Development Bank, Research Department. [Downloadable!]
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