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Determinants of Informal Sector Labour Demand: An Application of Alternative Methodological Approaches to South Western States of Nigeria

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  • Folawewo, A. O.

Abstract

Informal sector labour demand is analysed using a matched employer-employee data set obtained from a survey of informal enterprises in South-western Nigeria. Two different methodological approaches are used: conventional Ordinary Least Squares (OLS) and Instrumental Variable (IV) estimation techniques; and a Probit model is estimated to determine the probability of employees’ absorption by firms. While the former shows that informal sector’s labour demand is subject to firms’ optimisation behaviour, the latter indicates that labour demand decision is based on employers’ preference for discrimination. The paper argues that the importance of different factors in the determination of informal sector labour demand depends on the methodological approach.

Suggested Citation

  • Folawewo, A. O., 2006. "Determinants of Informal Sector Labour Demand: An Application of Alternative Methodological Approaches to South Western States of Nigeria," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(2).
    • Handle: RePEc:eaa:aeinde:v:6:y:2006:i:2_10
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    References listed on IDEAS

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    Cited by:

    1. Sanjay RODE, 2017. "The Effect Of Education On Income And Nature Of Employment For The Informal Sector Workers In Mumbai Metropolitan Region," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 9(2), pages 27-46, June.

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    More about this item

    Keywords

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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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