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The Decision to Become Informal Self-Employed in Latin America

In: Economic Development in Latin America

Author

Listed:
  • Patricio Aroca Gonzalez
  • Wendy Cunningham
  • William F. Maloney

Abstract

Much of the literature on the informal self-employed sector in LDCs, with roots in Harris and Todaro (1970), has assumed a dualistic labor market where self-employed workers who are unprotected by labor legislation are rationed out of protected or “formal” salaried sector jobs by above-market clearing remuneration in the protected sector. In this view, the sector is generally an involuntary holding pattern for young workers entering the labor force or older workers dismissed from formal jobs. In economic upturns, transitions should be largely unidirectional, from informal microenterprises to the formal sector.

Suggested Citation

  • Patricio Aroca Gonzalez & Wendy Cunningham & William F. Maloney, 2010. "The Decision to Become Informal Self-Employed in Latin America," Palgrave Macmillan Books, in: Hadi Salehi Esfahani & Giovanni Facchini & Geoffrey J. D. Hewings (ed.), Economic Development in Latin America, chapter 6, pages 62-72, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-29738-8_6
    DOI: 10.1057/9780230297388_6
    as

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