Job Polarization and the Informal Labor Market

M Gomez ()

No 19418, Documentos de trabajo - Alianza EFI from Alianza EFI

Abstract: This paper analyses the incidence of job polarization in developing and emerging countries, where a substantial fraction of the urban labor force works in the informal sector. I build a general equilibrium model with informality and endogenous occupational choice. Workers in the informal sector do not pay taxes, are less productive, and have the same ability to perform manual tasks. The analytical solution of the model shows that job polarization, driven by a Routine-Biased Technological Change (RBTC), could lead to a decrease in the share of employment in the informal sector and a reduction in the wage inequality at the bottom of the skill distribution.

Keywords: Informality; Job polarization; Technological change; Wage distribution (search for similar items in EconPapers)
JEL-codes: E26 J24 J31 J46 (search for similar items in EconPapers)
Pages: 37
Date: 2021-05-28
New Economics Papers: this item is included in nep-iue, nep-lma and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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