Informal Production and Labour Market Segmentation
An industry is modeled in which entrepreneurs, who are heterogeneous in ability, may produce formally or informally. Two cases are distinguished, with and without labour market segmentation, for which different patterns of formal/informal supply obtain. Without segmentation, informality may generate production where otherwise there would be none. Typically, however, a trade-off obtains: when informality makes output higher it cuts the profit of the most able entrepreneurs, potentially damaging growth. With segmentation, informality causes some replacement of 'good' jobs by 'bad,' and total employment may be affected in either direction; without segmentation the effect on total employment is weakly positive.
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Volume (Year): 167 (2011)
Issue (Month): 4 (December)
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References listed on IDEAS
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- El Badaoui, Eliane & Strobl, Eric & Walsh, Frank, 2007.
"Is There an Informal Employment Wage Penalty? Evidence from South Africa,"
IZA Discussion Papers
3151, Institute for the Study of Labor (IZA).
- 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.
- Frank Walsh & Eliane Badaoui & Eric Strobl, 2008. "Is there an informal employment wage penalty? Evidence from South Africa," Open Access publications 10197/182, School of Economics, University College Dublin.
- Albrecht, James & Navarro, Lucas & Vroman, Susan, 2006.
"The Effects of Labor Market Policies in an Economy with an Informal Sector,"
IZA Discussion Papers
2141, Institute for the Study of Labor (IZA).
- James Albrecht & Lucas Navarro & Susan Vroman, 2009. "The Effects of Labour Market Policies in an Economy with an Informal Sector," Economic Journal, Royal Economic Society, vol. 119(539), pages 1105-1129, 07.
- James Albrecht & Lucas Navarro & Susan Vroman, 2008. "The Effects of Labour Market Policies in an Economy with an Informal Sector," ILADES-Georgetown University Working Papers inv208, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.
- James Albrecht & Lucas Navarro & Susan Vroman, 2006. "The Effects of Labor Market Policies in an Economy with an Informal Sector," Working Papers gueconwpa~06-06-06, Georgetown University, Department of Economics.
- Amaral, Pedro S. & Quintin, Erwan, 2006. "A competitive model of the informal sector," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1541-1553, October.
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