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A Note on Informality in the Labor Market

  • Khamis, Melanie

    ()

    (Wesleyan University)

This paper provides a detailed analysis of various dimensions of informality in the Mexican labor market. To understand the nature of informality in terms of regulations and compliance, the legalistic view, and in terms of productivity view of the labor market this paper makes an empirical contribution to the debate in the literature on the concept of informality. Questions related to these various concepts, social security and benefits coverage, contractual information, legal status of migrants, the nature of self-employment and job history information are analyzed in terms of their relationship to each other and are also related to individual and household characteristics. This paper finds a substantial overlap between the various concepts, current legal arrangements of social security coverage or contract and also in the individual's job history. In terms of individual characteristics age, education, martial status and scores in the Raven's test, an ability measure, are significant determinants for the various forms of informality, with some degree of variation across the different categories. Overall, a case is made for further studies of household survey data and the implementation of questions relating to different dimensions of informality and their inter-linkages.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4676.

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Length: 26 pages
Date of creation: Dec 2009
Date of revision:
Publication status: published in: Journal of International Development, 2012, 24 (7), 894-908
Handle: RePEc:iza:izadps:dp4676
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  1. 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.
  2. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
  3. Peracchi, Franco & Perotti, Valeria & Scarpetta, Stefano, 2007. "Informality and social protection : preliminary results from pilot surveys in Bulgaria and Colombia," Social Protection Discussion Papers 41541, The World Bank.
  4. Maloney, William F., 2004. "Informality Revisited," World Development, Elsevier, vol. 32(7), pages 1159-1178, July.
  5. Khamis, Melanie, 2008. "Does the Minimum Wage Have a Higher Impact on the Informal than on the Formal Labor Market? Evidence from Quasi-Experiments," IZA Discussion Papers 3911, Institute for the Study of Labor (IZA).
  6. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2009. "Innovative Firms or Innovative Owners? Determinants of Innovation in Micro, Small, and Medium Enterprises," IZA Discussion Papers 3962, Institute for the Study of Labor (IZA).
  7. Henley, Andrew & Arabsheibani, Reza & Carneiro, Francisco G., 2006. "On Defining and Measuring the Informal Sector," IZA Discussion Papers 2473, Institute for the Study of Labor (IZA).
  8. Kanbur, Ravi, 2009. "Conceptualizing Informality: Regulation and Enforcement," Working Papers 48926, Cornell University, Department of Applied Economics and Management.
  9. Bosch, Mariano & Maloney, William F., 2010. "Comparative analysis of labor market dynamics using Markov processes: An application to informality," Labour Economics, Elsevier, vol. 17(4), pages 621-631, August.
  10. Sebastian Galiani & Federico Weinschelbaum, 2012. "Modeling Informality Formally: Households And Firms," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 821-838, 07.
  11. Magnac, Th, 1991. "Segmented or Competitive Labor Markets," Econometrica, Econometric Society, vol. 59(1), pages 165-87, January.
  12. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2008. "Who are the microenterprise owners ? Evidence from Sri Lanka on Tokman v. de Soto," Policy Research Working Paper Series 4635, The World Bank.
  13. Jaime Saavedra & Alberto Chong, 1999. "Structural reform, institutions and earnings: Evidence from the formal and informal sectors in urban Peru," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 95-116.
  14. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
  15. Laura Juarez, 2008. "Are Informal Workers Compensated for the Lack of Fringe Benefits? Free Health Care as an Instrument for Formality," Working Papers 0804, Centro de Investigacion Economica, ITAM.
  16. Mead, Donald C. & Morrisson, Christian, 1996. "The informal sector elephant," World Development, Elsevier, vol. 24(10), pages 1611-1619, October.
  17. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," World Bank Economic Review, World Bank Group, vol. 13(2), pages 275-302, May.
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