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Informality, Self-employment, and Heterogeneous Managerial Ability: A Model for Developing Countries

Author

Listed:
  • Eliane El Badaoui

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Frank Walsh
  • Eric Strobl
  • Olivier Bargain
  • Prudence Magejo

Abstract

The view of informal employment as a last resort in the labour market has recently been challenged by numerous studies documenting the existence of a high degree of heterogeneity within the formal and informal sectors. In particular, informal self-employment/employment may be voluntary or forced. There is currently not much theoretical support for these observations. We develop a theoretical model of the labour market with both formal and informal firms and a distribution of managerial skills in the population. Consistent with existing empirical evidence, this setup reconciles the undesirable and productive forms of self-employment that coexist in the economy.

Suggested Citation

  • Eliane El Badaoui & Frank Walsh & Eric Strobl & Olivier Bargain & Prudence Magejo, 2024. "Informality, Self-employment, and Heterogeneous Managerial Ability: A Model for Developing Countries," Post-Print hal-04606281, HAL.
    • Handle: RePEc:hal:journl:hal-04606281
    as

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    References listed on IDEAS

    as
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