IDEAS home Printed from https://ideas.repec.org/p/wii/bpaper/075.html
   My bibliography  Save this paper

Earnings Inequality and the Informal Economy: Evidence from Serbia

Author

Listed:
  • Gorana Krstić
  • Peter Sanfey

Abstract

We analyse the extent and evolution of informality and inequality in the Serbian labour market between 2002 and 2007, using data from the Living Standard Measurement Surveys (LSMS). Two surprising results emerge. First, the level of informal employment has risen significantly over the period, despite strong economic growth and the introduction of a range of market-oriented reforms. Second, the level of inequality in earnings seems to have remained more or less constant over the period, in contrast to the experience of other countries at a similar stage of transition. We show that informal employees earn significantly less than those in the formal sector, controlling for a range of other variables, and informality plays an increasingly important role in explaining earnings inequality.

Suggested Citation

  • Gorana Krstić & Peter Sanfey, 2008. "Earnings Inequality and the Informal Economy: Evidence from Serbia," wiiw Balkan Observatory Working Papers 75, The Vienna Institute for International Economic Studies, wiiw.
    • Handle: RePEc:wii:bpaper:075
    as

    Download full text from publisher

    File URL: https://wiiw.ac.at/earnings-inequality-and-the-informal-economy-evidence-from-serbia-dlp-3222.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Branko Milanovic, 1999. "Explaining the increase in inequality during transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 299-341, July.
    2. Asad Alam & Mamta Murthi & Ruslan Yemtsov & Edmundo Murrugarra & Nora Dudwick & Ellen Hamilton & Erwin Tiongson, 2005. "Growth, Poverty and Inequality : Eastern Europe and the Former Soviet Union," World Bank Publications - Books, The World Bank Group, number 7287.
    3. Andrew Newell & Barry Reilly, 1999. "Rates of Return to Educational Qualifications in the Transitional Economies," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 67-84.
    4. Wan, Guanghua, 2004. "Accounting for income inequality in rural China: a regression-based approach," Journal of Comparative Economics, Elsevier, vol. 32(2), pages 348-363, June.
    5. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    6. Krstic, Gorana & Sanfey, Peter, 2007. "Mobility, poverty and well-being among the informally employed in Bosnia and Herzegovina," Economic Systems, Elsevier, vol. 31(3), pages 311-335, September.
    7. repec:bla:econom:v:62:y:1995:i:245:p:29-63 is not listed on IDEAS
    8. Schneider, Friedrich, 2004. "The Size of the Shadow Economies of 145 Countries all over the World: First Results over the Period 1999 to 2003," IZA Discussion Papers 1431, Institute of Labor Economics (IZA).
    9. Sebastian Leitner & Mario Holzner, 2008. "Economic Inequality in Central, East and Southeast Europe," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 5(1), pages 155-188.
    10. World Bank, 2004. "Serbia and Montenegro : An Agenda for Economic Growth and Employment," World Bank Publications - Reports 14487, The World Bank Group.
    11. Jan J. Rutkowski & Stefano Scarpetta, 2005. "Enhancing Job Opportunities : Eastern Europe and the Former Soviet Union," World Bank Publications - Books, The World Bank Group, number 7408.
    12. Krstic, Gorana & Litchfield, Julie & Reilly, Barry, 2007. "An anatomy of male labour market earnings inequality in Serbia, 1996-2003," Economic Systems, Elsevier, vol. 31(1), pages 97-114, March.
    13. Rosser, J. Jr. & Rosser, Marina V. & Ahmed, Ehsan, 2000. "Income Inequality and the Informal Economy in Transition Economies," Journal of Comparative Economics, Elsevier, vol. 28(1), pages 156-171, March.
    14. repec:bla:revinw:v:46:y:2000:i:2:p:139-59 is not listed on IDEAS
    15. Gary S. Fields & Gyeongjoon Yoo, 2000. "Falling Labor Income Inequality In Korea'S Economic Growth: Patterns And Underlying Causes," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(2), pages 139-159, June.
    16. Edward Christie & Mario Holzner, 2004. "Household Tax Compliance and the Shadow Economy in Central and Southeastern Europe," wiiw Balkan Observatory Working Papers 38, The Vienna Institute for International Economic Studies, wiiw.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Krstic, Gorana & Litchfield, Julie & Reilly, Barry, 2007. "An anatomy of male labour market earnings inequality in Serbia, 1996-2003," Economic Systems, Elsevier, vol. 31(1), pages 97-114, March.
    2. Aristei, David & Perugini, Cristiano, 2012. "Inequality and reforms in transition countries," Economic Systems, Elsevier, vol. 36(1), pages 2-10.
    3. Laporšek, Suzana & Orazem, Peter F. & Vodopivec, Milan & Vodopivec, Matija, 2021. "Winners and losers after 25 years of transition: Decreasing wage inequality in Slovenia," Economic Systems, Elsevier, vol. 45(2).
    4. Guanghua Wan, 2006. "Poverty Accounting by Factor Components: With an Empirical Illustration Using Chinese Data," WIDER Working Paper Series RP2006-63, World Institute for Development Economic Research (UNU-WIDER).
    5. Anna Lukiyanova, 2015. "Earnings inequality and informal employment in Russia," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(2), pages 469-516, April.
    6. Sebastian Leitner & Robert Stehrer, 2009. "Determinants of Inequality in Selected SEE Countries: Results from Shapley Value Decompositions," wiiw Balkan Observatory Working Papers 84, The Vienna Institute for International Economic Studies, wiiw.
    7. Hoang Van Long, 2013. "Unequal Regional Development in Rural Vietnam: Sources of Spatial Disparities and Policy Considerations," Journal of Economics and Behavioral Studies, AMH International, vol. 5(6), pages 325-335.
    8. Omoniyi B Alimi & David C Maré & Jacques Poot, 2020. "The effects of immigration and skills on urban income inequality in New Zealand: two decomposition approaches," RF Berlin - CReAM Discussion Paper Series 2023, Rockwool Foundation Berlin (RF Berlin) - Centre for Research and Analysis of Migration (CReAM).
    9. Alimi, Omoniyi & Maré, David C. & Poot, Jacques, 2018. "International Migration and the Distribution of Income in New Zealand Metropolitan and Non-Metropolitan Areas," IZA Discussion Papers 11959, Institute of Labor Economics (IZA).
    10. Kecmanovic, Milica, 2012. "Men's wage inequality in Serbia's transition," Economic Systems, Elsevier, vol. 36(1), pages 65-86.
    11. Jens Holscher & Cristiano Perugini & Fabrizio Pompei, 2011. "Wage inequality, labour market flexibility and duality in Eastern and Western Europe," Post-Communist Economies, Taylor & Francis Journals, vol. 23(3), pages 271-310.
    12. Juan Antonio Duro & Jordi Teixidó-Figueras & Emilio Padilla, 2017. "The Causal Factors of International Inequality in $$\hbox {CO}_{2}$$ CO 2 Emissions Per Capita: A Regression-Based Inequality Decomposition Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 67(4), pages 683-700, August.
    13. Chi, Wei, 2012. "Capital income and income inequality: Evidence from urban China," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 228-239.
    14. Rosalba Manna & Andrea Regoli, 2012. "Regression-based approaches for the decomposition of income inequality in Italy, 1998-2008," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 14(1), pages 5-18, October.
    15. Xiaoyun Liu & Terry Sicular, 2009. "Nonagricultural Employment Determinants and Income Inequality Decomposition," Chinese Economy, Taylor & Francis Journals, vol. 42(4), pages 29-43, July.
    16. Hanewald, Katja & Jia, Ruo & Liu, Zining, 2021. "Why is inequality higher among the old? Evidence from China," China Economic Review, Elsevier, vol. 66(C).
    17. Molnar, Maria, 2010. "Income distribution in Romania," MPRA Paper 30062, University Library of Munich, Germany.
    18. Claudio Quintano & Paolo Mazzocchi, 2018. "Behind the GDP: some remarks on the shadow economy in Mediterranean countries," European Journal of Law and Economics, Springer, vol. 45(1), pages 147-173, February.
    19. repec:lic:licosd:22108 is not listed on IDEAS
    20. Will Bartlett, 2013. "Structural Unemployment in the Western Balkans: Challenges for Skills Anticipation and Matching Policies," European Planning Studies, Taylor & Francis Journals, vol. 21(6), pages 890-908, June.
    21. Quheng Deng & Shi Li, 2009. "What Lies behind Rising Earnings Inequality in Urban China? Regression-based Decompositions," CESifo Economic Studies, CESifo Group, vol. 55(3-4), pages 598-623.

    More about this item

    Keywords

    informal economy; inequality; Serbia;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wii:bpaper:075. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Customer service (email available below). General contact details of provider: https://edirc.repec.org/data/wiiwwat.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.