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Migration as a Substitute for Informal Activities: Evidence from Tajikistan

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  • Ilhom Abdulloev
  • Ira N. Gang

    ()

  • John Landon-Lane

Abstract

How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up informally employed. Alternatively, migration and informality may be substitutes since migrants’ incomes in their new locations and income earned in the home informal economy (without migration) are an imperfect trade-off. Tajikistan possesses both a very large informal sector and extensive international emigration. Using the gap between household expenditure and income as an indicator of informal activity, we find negative significant correlations between informal activities and migration: the gap between expenditure and income falls in the presence of migration. Furthermore, Tajikistan’s professional workers ability to engage in informal activities enables them to forgo migration, while low-skilled non-professionals without post-secondary education choose to migrate instead of working in the informal sector. Our empirical evidence suggests migration and informality substitute for one another.

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Paper provided by Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies) in its series Working Papers with number 311.

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Length: 31
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:ost:wpaper:311

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Keywords: informal; migration; remittances; Tajikistan;

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  1. 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.
  2. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  3. Grimm, Michael & Gunther, Isabel, 2005. "Inter- and Intra-household Linkages Between the Informal and Formal Sector: A Case Study for Urban Burkina Faso," Working Paper Series RP2005/14, World Institute for Development Economic Research (UNU-WIDER).
  4. Dimova, Ralitza & Gang, Ira N., 2004. "Self-Selection and Earnings During Volatile Transition," IZA Discussion Papers 1158, Institute for the Study of Labor (IZA).
  5. Falkingham, Jane, 2004. "Poverty, out-of-pocket payments and access to health care: evidence from Tajikistan," Social Science & Medicine, Elsevier, vol. 58(2), pages 247-258, January.
  6. Gang, Ira N. & Gangopadhyay, Shubhashis, 1987. "Employment, output and the choice of techniques : The trade-off revisited," Journal of Development Economics, Elsevier, vol. 25(2), pages 321-327, April.
  7. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," Working Paper Series RP2005/18, World Institute for Development Economic Research (UNU-WIDER).
  8. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
  9. Gang, Ira N & Gangopadhyay, Shubhashis, 1987. "Optimal Policies in a Dual Economy with Open Unemployment and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 378-87, June.
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