Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina
Poverty and informal employment are often regarded as correlated phenomena. Many empirical studies have shown that informal employment has a causal impact on household poverty, mainly through low wages. Yet other studies focus on the reverse causality from poverty to informality, arising from a range of constraints that poverty poses to job holders. Only recently have empirical researchers tried to study the simultaneous two-way relationship between poverty and informality. However, existing studies have relied upon cross sectional data and static econometric models. This paper takes the next step and studies the dynamics of poverty and informality using longitudinal data. Our empirical analysis is based on a bivariate dynamic random effect probit model and recent panel data from Argentina. The results show that both poverty and informal employment are highly persistent processes at the individual level. Moreover, positive spillover effects are found from past poverty on current informal employment and from past informality to current poverty status, corroborating the view that the two processes are also shaped by interrelated dynamics.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.ecineq.org|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gasparini Leonardo & Leonardo Tornaroli, 2009.
"Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata,"
REVISTA DESARROLLO Y SOCIEDAD,
UNIVERSIDAD DE LOS ANDES-CEDE, September.
- Leonardo Gasparini & Leopoldo Tornarolli, 2007. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," CEDLAS, Working Papers 0046, CEDLAS, Universidad Nacional de La Plata.
- Jenkins, Stephen P, 1995. "Easy Estimation Methods for Discrete-Time Duration Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(1), pages 129-38, February.
- Hansen, Jörgen & Wahlberg, Roger, 2004. "Poverty Persistence in Sweden," IZA Discussion Papers 1209, Institute for the Study of Labor (IZA).
- 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.
- Aassve, Arnstein & Burgess, Simon & Dickson, Matt & Propper, Carol, 2005.
"Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK,"
ISER Working Paper Series
2005-26, Institute for Social and Economic Research.
- Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2006. "Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK," CASE Papers case106, Centre for Analysis of Social Exclusion, LSE.
- Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2005. "Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK," The Centre for Market and Public Organisation 05/134, Department of Economics, University of Bristol, UK.
- Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2006. "Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK," LSE Research Online Documents on Economics 6243, London School of Economics and Political Science, LSE Library.
When requesting a correction, please mention this item's handle: RePEc:inq:inqwps:ecineq2009-146. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Ana Lugo)
If references are entirely missing, you can add them using this form.