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Migration as a Substitute for Informal Activities: Evidence from Tajikistan

Author

Listed:
  • Ilhom Abdulloev

    () (Rutgers University)

  • Ira N. Gang

    () (Rutgers University & Fellow of IZA, OEI, CReaM)

  • John Landon-Lane

    () (Rutgers University)

Abstract

How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up informally employed. Alternatively, migration and informality may be substitutes since migrants' incomes in their new locations and income earned in the home informal economy (without migration) are an imperfect trade-off. Tajikistan possesses both a very large informal sector and extensive international emigration. Using the gap between household expenditure and income as an indicator of informal activity, we find negative significant correlations between informal activities and migration: the gap between expenditure and income falls in the presence of migration. Furthermore, Tajikistan's professional workers ability to engage in informal activities enables them to forgo migration, while low-skilled non-professionals without post-secondary education choose to migrate instead of working in the informal sector. Our empirical evidence suggests migration and informality substitute for one another.

Suggested Citation

  • Ilhom Abdulloev & Ira N. Gang & John Landon-Lane, 2011. "Migration as a Substitute for Informal Activities: Evidence from Tajikistan," CReAM Discussion Paper Series 1124, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  • Handle: RePEc:crm:wpaper:1124
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    References listed on IDEAS

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    1. Ira N. Gang & Ralitza Dimova, 2004. "Self-Selection And Earnings During Volatile Transition," Departmental Working Papers 200409, Rutgers University, Department of Economics.
    2. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    3. Grimm, Michael & Gunther, Isabel, 2005. "Inter- and Intra-household Linkages Between the Informal and Formal Sector: A Case Study for Urban Burkina Faso," WIDER Working Paper Series 014, World Institute for Development Economic Research (UNU-WIDER).
    4. Gang, Ira N. & Gangopadhyay, Shubhashis, 1987. "Employment, output and the choice of techniques : The trade-off revisited," Journal of Development Economics, Elsevier, vol. 25(2), pages 321-327, April.
    5. Fields, Gary S, 1976. "Labor Force Migration, Unemployment and Job Turnover," The Review of Economics and Statistics, MIT Press, vol. 58(4), pages 407-415, November.
    6. Dimova, Ralitza & Gang, Ira N. & Landon-Lane, John, 2005. "The Informal Sector During Crisis and Transition," WIDER Working Paper Series 018, World Institute for Development Economic Research (UNU-WIDER).
    7. Gang, Ira N & Gangopadhyay, Shubhashis, 1987. "Optimal Policies in a Dual Economy with Open Unemployment and Surplus Labour," Oxford Economic Papers, Oxford University Press, vol. 39(2), pages 378-387, June.
    8. Fields, Gary S, 1979. "Place-to-Place Migration: Some New Evidence," The Review of Economics and Statistics, MIT Press, vol. 61(1), pages 21-32, February.
    9. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    10. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    11. Falkingham, Jane, 2004. "Poverty, out-of-pocket payments and access to health care: evidence from Tajikistan," Social Science & Medicine, Elsevier, vol. 58(2), pages 247-258, January.
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    Cited by:

    1. Petr Huber & Ulugbek Rahimov, 2014. "Formal and Informal Sector Wage Differences in Transition Economies: Evidence from Tajikistan," MENDELU Working Papers in Business and Economics 2014-48, Mendel University in Brno, Faculty of Business and Economics.
    2. Ivlevs, Artjoms, 2016. "Remittances and Informal Work," IZA Discussion Papers 10196, Institute for the Study of Labor (IZA).
    3. Victoria Strokova & Mohamed Ihsan Ajwad, 2017. "Tajikistan Jobs Diagnostic," World Bank Other Operational Studies 26029, The World Bank.
    4. Anita Staneva & G Arabsheibani, 2014. "Is there an informal employment wage premium? Evidence from Tajikistan," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-24, December.

    More about this item

    Keywords

    informal; migration; remittances; Tajikistan;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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