Understanding a Less Developed Labor Market through the Lens of Social Security Data

Nada Wasi, Chinnawat Devahastin Na Ayudhya, Pucktada Treeratpituk and Chommanart Nittayo

No 147, PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research

Abstract: While understanding labor market dynamics is crucial for designing the country's social protection programs, prohibitive longitudinal surveys are rarely available in less developed countries. We illustrate that employment history from Social Security records can provide several important insights by using data from a middle-income country, Thailand. First, in contrary to the traditional view, we find that the formal and informal sectors are quite connected. Our analysis of millions of individual histories by a machine learning technique shows that more than half of registered workers left the formal sector either seasonally or permanently long before their retirement age. This finding raises a question of whether the social protection schemes being separately designed for formal and informal workers are effective. Second, the semi-formal workers also had a much flatter wage-age profile compared to those always staying in the formal sector. This observation calls for effective redistributive tools to prevent earnings inequality to translate into disparities in old-age and transmit to the next generation. Lastly, on the employer size, we find that almost half of formally registered firms had fewer than five employees, the benchmark often used to define informal firms. This result suggests that the distributions of firm sizes differ across countries and the employer size alone is unlikely sufficient to define informal workers.

Keywords: Employment; Work History; Social Security; K-means Clustering; Thailand (search for similar items in EconPapers)
JEL-codes: J01 J08 J21 J60 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2021-01
New Economics Papers: this item is included in nep-age, nep-big, nep-cmp, nep-dev, nep-iue and nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.pier.or.th/files/dp/pier_dp_147.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pui:dpaper:147

Ordering information: This working paper can be ordered from
https://www.pier.or.th/en/dp/147/

Access Statistics for this paper

More papers in PIER Discussion Papers from Puey Ungphakorn Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by ().