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Is There an Informal Employment Wage Premium? Evidence from Tajikistan

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  • Arabsheibani, Reza

    ()
    (Swansea University)

  • Staneva, Anita V.

    ()
    (Swansea University)

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    Abstract

    This paper defines informal sector employment and decomposes the difference in earnings distributions between formal and informal sector employees in Tajikistan for 2007. Using the quantile regression decomposition technique proposed by Machado and Mata (2005), we find a significant informal employment wage premium across the whole earnings distribution. This contrast with earlier studies and casts doubt on the recent literature showing that the informal sector is poorly rewarded. It seems to be the case that the informal employment in Tajikistan is the main source of income.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6727.

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    Length: 28 pages
    Date of creation: Jul 2012
    Date of revision:
    Publication status: published in: IZA Journal of Labor & Development, 2014, 3:1
    Handle: RePEc:iza:izadps:dp6727

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    Keywords: quantile regression decomposition; formal/informal employment;

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    References

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    1. Michael J. Pisani & José A. Pagán, 2004. "Sectoral Selection and Informality: a Nicaraguan Case Study," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 541-556, November.
    2. 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.
    3. 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.
    4. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    5. Mazumdar, Dipak, 1983. "Segmented Labor Markets in LDCs," American Economic Review, American Economic Association, vol. 73(2), pages 254-59, May.
    6. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    7. Leonardo Gasparini & Leopoldo Tornarolli, 2007. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," CEDLAS, Working Papers 0046, CEDLAS, Universidad Nacional de La Plata.
    8. Kolev, Alexandre, 1998. "Labour Supply in the Informal Economy in Russia during Transition," CEPR Discussion Papers 2024, C.E.P.R. Discussion Papers.
    9. Aysit Tansel, 1999. "Formal Versus Informal Sector Choice of Wage Earners and their Wages in Turkey," Working Papers 9927, Economic Research Forum, revised Sep 1999.
    10. Rose, Richard & McAllister, Ian, 1996. "Is Money the Measure of Welfare in Russia?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 42(1), pages 75-90, March.
    11. Menno Pradhan & Arthur Van Soest, 1997. "Household Labor Supply In Urban Areas Of Bolivia," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 300-310, May.
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    Cited by:
    1. Garcia Cruz, Gustavo Adolfo, 2014. "Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia," MPRA Paper 55224, University Library of Munich, Germany.

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