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Is Informal Sector Work an Alternative to Workfare Benefits? The Case of Pre-program Expansion and Economic Crisis

  • Melanie Khamis

Limited availability of workfare programs and unemployment insurance and a large informal sector are features of the Argentine labor market at the outset of the 2001 economic crisis. This paper tests the hypothesis whether informal work is an alternative to workfare participation before a large-scale program expansion took place. Results from the propensity score matching indicate that observable characteristics of informal low-income workers and current workfare participants are significantly different. However, within these groups, it is possible to identify subgroups that exhibit similar observable characteristics. This indicates that only a subset of the individuals sees workfare and informal sector work as substitutable alternatives.

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Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 16 (2012)
Issue (Month): 4 (November)
Pages: 579-593

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Handle: RePEc:bla:rdevec:v:16:y:2012:i:4:p:579-593
DOI: 10.1111/rode.2012.16.issue-4
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  1. Eliane El Badaoui & Eric Strobl & Frank Walsh, 2008. "Is There an Informal Employment Wage Penalty? Evidence from South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 683-710.
  2. Deepa Narayan & Patti Petesch, 2002. "Voices of the Poor : From Many Lands," World Bank Publications, The World Bank, number 14053, November.
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  7. Jeffrey Smith, 2000. "A Critical Survey of Empirical Methods for Evaluating Active Labor Market Policies," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(III), pages 247-268, September.
  8. Marco Caliendo & Sabine Kopeinig, 2005. "Some Practical Guidance for the Implementation of Propensity Score Matching," Discussion Papers of DIW Berlin 485, DIW Berlin, German Institute for Economic Research.
  9. Pratap, Sangeeta & Quintin, Erwan, 2006. "Are labor markets segmented in developing countries? A semiparametric approach," European Economic Review, Elsevier, vol. 50(7), pages 1817-1841, October.
  10. Maloney, William, 2003. "Informality revisited," Policy Research Working Paper Series 2965, The World Bank.
  11. Iturriza, Ana & Bedi, Arjun S. & Sparrow, Robert, 2008. "Unemployment Assistance and Transition to Employment in Argentina," IZA Discussion Papers 3579, Institute for the Study of Labor (IZA).
  12. Milan Vodopivec, 2004. "Income Support for the Unemployed : Issues and Options," World Bank Publications, The World Bank, number 14922, November.
  13. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
  14. Leonardo Gasparini, 2001. "Microeconometric decompositions of aggregate variables. An application to labor informality in Argentina," Working Papers 68, FIEL.
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  16. Pablo D. López Zadicoff & Jorge A. Paz, 2003. "El Programa Jefes de Hogar. Eligibilidad, participación y trabajo," CEMA Working Papers: Serie Documentos de Trabajo. 242, Universidad del CEMA.
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