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Participation and sector selection in Nicaragua


  • Dario Pozzoli

    (Department of Economics, Aarhus School of Business, Frichshuset, Hermodsvej 22 DK-8230, Aabyhoj, Denmark)

  • Marco Ranzani

    (Universita' Cattolica-Largo Gemelli, 1 20123, Milano, Italy)


This paper investigates the structure of the labor market in Nicaragua and is aimed at understanding the determinants of the choice between a number of segments, namely inactivity, unemployment, agriculture, the formal and the informal sectors. In addition, a model with a separate participation equation is estimated: it allows us to understand that age mainly is a supply-side factor, while education is an important element determining employer's choices Information networks, captured by the presence of a household member working in the formal sector, and geographical barriers to mobility also play a leading role. Copyright © 2009 John Wiley & Sons, Ltd.

Suggested Citation

  • Dario Pozzoli & Marco Ranzani, 2010. "Participation and sector selection in Nicaragua," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(5), pages 591-610.
  • Handle: RePEc:wly:jintdv:v:22:y:2010:i:5:p:591-610 DOI: 10.1002/jid.1599

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    References listed on IDEAS

    1. Hausman, Jerry A & Wise, David A, 1978. "A Conditional Probit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Econometrica, Econometric Society, vol. 46(2), pages 403-426, March.
    2. Michael J. Pisani & José A. Pagán, 2004. "Sectoral Selection and Informality: a Nicaraguan Case Study," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 541-556, November.
    3. Piore, Michael J, 1983. "Labor Market Segmentation: To What Paradigm Does It Belong?," American Economic Review, American Economic Association, vol. 73(2), pages 249-253, May.
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    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean


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