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Is There an Informal Employment Wage Premium? Evidence from Tajikistan

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  • Arabsheibani, Reza

    () (London School of Economics)

  • Staneva, Anita

    () (University of Sydney)

Abstract

This paper defines informal sector employment and decomposes the difference in earnings distributions between formal and informal sector employees in Tajikistan for 2007. Using the quantile regression decomposition technique proposed by Machado and Mata (2005), we find a significant informal employment wage premium across the whole earnings distribution. This contrast with earlier studies and casts doubt on the recent literature showing that the informal sector is poorly rewarded. It seems to be the case that the informal employment in Tajikistan is the main source of income.

Suggested Citation

  • Arabsheibani, Reza & Staneva, Anita, 2012. "Is There an Informal Employment Wage Premium? Evidence from Tajikistan," IZA Discussion Papers 6727, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6727
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    Cited by:

    1. Petr Huber & Ulugbek Rahimov, 2014. "Formal and Informal Sector Wage Differences in Transition Economies: Evidence from Tajikistan," MENDELU Working Papers in Business and Economics 2014-48, Mendel University in Brno, Faculty of Business and Economics.
    2. Aysit Tansel & Halil Ibrahim Keskin & Zeynel Abidin Ozdemir, 2015. "Is There An Infırmal Employment Wage Penalty in Egypt?," ERC Working Papers 1508, ERC - Economic Research Center, Middle East Technical University, revised Sep 2015.
    3. Gustavo A. García, 2017. "Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 985-1017, November.
    4. Robertson, Raymond & Di, Hongyang & Brown, Drusilla & Dehejia, Rajeev, 2016. "Working Conditions, Work Outcomes, and Policy in Asian Developing Countries," ADB Economics Working Paper Series 497, Asian Development Bank.
    5. Ivlevs, Artjoms, 2016. "Remittances and Informal Work," IZA Discussion Papers 10196, Institute for the Study of Labor (IZA).
    6. Nguyen, Huu-Chi. & Nguyen-Huu, Thanh Tam. & Le, Thi-Thuy-Linh., 2016. "Non-standard forms of employment in some Asian countries : a study of wages and working conditions of temporary workers," ILO Working Papers 994901213402676, International Labour Organization.
    7. Altay Mussurov & G Arabsheibani, 2015. "Informal self-employment in Kazakhstan," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-19, December.
    8. Victoria Strokova & Mohamed Ihsan Ajwad, 2017. "Tajikistan Jobs Diagnostic," World Bank Other Operational Studies 26029, The World Bank.
    9. El-hadj Bah & Josef C. Brada, 2014. "Labor Markets in the Transition Economies: An Overview," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 11(1), pages 3-53, June.
    10. Mengistu Assefa Wendimu & Peter Gibbon, 2014. "Labour markets for irrigated agriculture in central Ethiopia: Wage premiums and segmentation," IFRO Working Paper 2014/06, University of Copenhagen, Department of Food and Resource Economics.

    More about this item

    Keywords

    quantile regression decomposition; formal/informal employment;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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