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International bridges and informal employment

Author

Listed:
  • Hayakawa, Kazunobu
  • Keola, Souknilanh
  • Sudsawasd, Sasatra
  • Yamanouchi, Kenta

Abstract

This study empirically investigates the effects on the formal–informal wage gap of the opening of an international bridge, specifically the second Thai–Lao Friendship Bridge, between Thailand and Laos in December 2006. We examine the wage gap between formal and informal workers in the border regions of Thailand using individual-level data from the Informal Employment Surveys for 2006 and 2011. We address endogeneity issues by using the instrumental variable method and introducing time-variant province fixed effects. As an instrument, we use the existence of formal workers in each family. Our findings can be summarized as follows. We find that the opening of the second bridge increased wages to a greater extent for formal workers than for informal workers; that is, it expanded the formal–informal wage gap. Such an effect is localized and can be observed up to 100 km from the bridge.

Suggested Citation

  • Hayakawa, Kazunobu & Keola, Souknilanh & Sudsawasd, Sasatra & Yamanouchi, Kenta, 2025. "International bridges and informal employment," Journal of Comparative Economics, Elsevier, vol. 53(3), pages 667-682.
    • Handle: RePEc:eee:jcecon:v:53:y:2025:i:3:p:667-682
    DOI: 10.1016/j.jce.2025.04.006
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    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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