Risk Attitudes and Informal Employment in Ukraine

Thomas Dohmen, Melanie Khamis, Hartmut Lehmann () and Norberto Pignatti
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Thomas Dohmen: Bonn University, University of Maastricht and IZA
Melanie Khamis: Wesleyan University and IZA
Hartmut Lehmann: Leibniz Institute for East and Southeast European Studies, University of Regensburg, University of Bologna and IZA

No 401, Working Papers from Leibniz Institut für Ost- und Südosteuropaforschung (Institute for East and Southeast European Studies)

Abstract: Using data from the four waves of the Ukrainian Longitudinal Monitoring Survey – ULMS (2003, 2004, 2007 and 2012), we analyze whether workers with a higher willingness to take risks are more likely to select into informal employment contracts. The data permit us to distinguish between five employment states: formal and informal self-employment, formal salaried employment, voluntary informal salaried employment, and involuntary informal salaried employment. The empirical evidence reveals risk attitudes as a strong causal determinant of the incidence of all types of informal employment but involuntary informal salaried employment. We also provide evidence that our results are not driven by reverse causality: risk attitudes impact on the choice of employment state whilst this latter does not influence risk attitudes. Linking risk attitudes with selection into employment states, we also can establish that along the formal-informal divide the Ukrainian labor market is predominantly segmented for salaried workers whilst it is integrated for the self-employed.

Keywords: Risk attitudes; informal employment; labor market segmentation; Ukraine (search for similar items in EconPapers)
JEL-codes: D91 J42 J46 P23 (search for similar items in EconPapers)
Pages: 56
Date: 2023-10
New Economics Papers: this item is included in nep-cis, nep-iue and nep-tra
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Related works:
Working Paper: Risk Attitudes and Informal Employment in Ukraine (2024)
Working Paper: Risk Attitudes and Informal Employment in Ukraine (2023)
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