Informal employment and happiness: Model with endogenous regressors
In the paper relation between the unregistered employment and life satisfaction is investigated. Endogeneity of the employment status and income is described by the system of simultaneous equations with random individual effects. The system is estimated with maximum likelihood on the Russia Longitudinal Monitoring Survey of HSE (RLMS-HSE) data. The key result of the paper is that informal status does not necessary decrease the level of life satisfaction. For example, if income were fixed, men would be more satisfied with their lifes in the unregistered employements in comparison with the registered jobs, ceteris paribus. The same are for women, but only in the cases when earnings are unfixed (they are a bit higher in the unregistered unemployement).
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