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Formal Labor Market Dynamics and Development

Author

Listed:
  • Anne Brockmeyer
  • François Gerard
  • Gabriel Ulyssea
  • Linda Wu
  • Marcelo Bergolo
  • Rodrigo Ceni González
  • Benard Kirui
  • Andrea Lopez-Luzuriaga
  • Leonardo Fabio Morales
  • Andrea Otero-Cortés
  • Nadine Riedel
  • Matías Tapia
  • Tanisa Tawichsri
  • Verena Wiedemann

Abstract

This paper studies formal employment dynamics using linked employer-employee data from eight countries spanning a wide income range from Kenya to Chile. First, we show that formality rates increase with development, both between and within countries, because more workers enter the formal sector, not because they spend more time in formal jobs. Second, formal labor market fluidity increases with development, as workers hold more formal jobs, spend less time in each job, and less time between jobs. Third, greater fluidity is associated with higher life-cycle wage growth, which is largely accounted for by within- rather than between-firm wage gains.

Suggested Citation

  • Anne Brockmeyer & François Gerard & Gabriel Ulyssea & Linda Wu & Marcelo Bergolo & Rodrigo Ceni González & Benard Kirui & Andrea Lopez-Luzuriaga & Leonardo Fabio Morales & Andrea Otero-Cortés & Nadine, 2026. "Formal Labor Market Dynamics and Development," RFBerlin Discussion Paper Series 26154, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26154
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    Keywords

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    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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