Are informal self-employment and informal employment as employee behaviorally distinct labor force states?

Luca Flabbi and Mauricio M. Tejada

Economics Letters, 2023, vol. 231, issue C

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 an employee be considered two different labor market states? Both analyses strongly reject equality between the two states, cautioning against aggregating them in a common “informality state”. The parametric model identifies that the variation in informal self-employment income and the short duration of informal employee jobs are the primary factors that contribute to the observed differences between these labor market states.

Keywords: Labor market frictions; Search and matching; Informality; Self-employment (search for similar items in EconPapers)
Date: 2023
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Working Paper: Are Informal Self-Employment and Informal Employment as Employee Behaviorally Distinct Labor Force States? (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:231:y:2023:i:c:s0165176523003038

DOI: 10.1016/j.econlet.2023.111278

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