Are Informal Self-Employment and Informal Employment as Employee Behaviorally Distinct Labor Force States?

Luca Flabbi and Mauricio Tejada ()
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Mauricio Tejada: Diego Portales University

No 16225, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper performs both a parametric and non-parametric analysis to address a fundamental question in the growing literature using search models to study labor market informality: should informal self-employment and informal employment as employee be considered two different labor market states? Both the non-parametric and the parametric tests strongly reject equality between the two states, cautioning against aggregating them in a common "informality state." The parametric model indicates the source of the difference in the high dispersion of informal self-employment income and in the low duration of informal employee jobs.

Keywords: labor market frictions; search and matching; informality; self-employment (search for similar items in EconPapers)
JEL-codes: J46 J64 O17 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2023-06
New Economics Papers: this item is included in nep-iue
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Citations: View citations in EconPapers (1)

Published - published in: Economics Letters, 2023, 231, 111278, October

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Journal Article: Are informal self-employment and informal employment as employee behaviorally distinct labor force states? (2023)
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