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Insights on the theoretical causes of labour informality: the indivisibility of hours

Author

Listed:
  • Carolia Quintero-Rojas
  • Sébastien Ménard

    (GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université, UM - Le Mans Université, IRA - Institut du Risque et de l'Assurance, Le Mans)

Abstract

Achieving decent work for all is essential for promoting sustainable and inclusive growth and development. However, in the world prevails a marked lack of decent work, higher unemployment, and persistent inequalities; and this panorama has been exacerbated by the global effects of the pandemic caused by COVID – 19. The gap from decent work is especially pronounced in the informal economy, which affects roughly 61% of the global employed population; moreover, it implies large social and economic costs, affecting income, occupational health and safety, productivity, and welfare. In this context, our goal is to develop a suitable theoretical framework to explore the causes of informal employment, based on the wage posting approach pioneered by Burdett and Mortensen (1998). Our note adds to this line of research by considering other general characteristic of the formal sector as a cause of informality, such as the rigid contracts regarding wages and working time. This hypothesis seems pertinent given that informality affects high-skilled workers too.

Suggested Citation

  • Carolia Quintero-Rojas & Sébastien Ménard, 2020. "Insights on the theoretical causes of labour informality: the indivisibility of hours," Post-Print hal-05769621, HAL.
    • Handle: RePEc:hal:journl:hal-05769621
    DOI: 10.35429/JSR.2020.18.6.25.33
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