EconPapers    
Economics at your fingertips  
 

The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data

Olivier Bargain and Prudence Kwenda
Additional contact information
Prudence Kwenda: WITS - University of the Witwatersrand [Johannesburg]

Post-Print from HAL

Abstract: We estimate the informal-formal sector pay gap throughout the conditional wage distribution using panel data from Brazil, Mexico, and South Africa. We control for time-invariant unobservables, and identification stems from intersector movers. We control for observables in a nonlinear way using propensity score reweighting and carefully check for potential measurement errors. Using similar definitions of informality, we obtain consistent results for all three countries: informally employed workers earn much less than formal workers primarily because of lower observable and unobservable skills. Estimates of the conditional wage gap show that they are also underpaid compared to their formal sector counterparts. In all three countries, the informal wage penalty is larger in the lower part of the conditional distribution and tends to disappear at the top (i.e., the informal sector increases wage dispersion). The magnitudes of these effects vary across countries, with the largest penalties in lower conditional quantiles of South Africa and more modest wage gaps in Latin America. We suggest explanations in line with different legal and labor market conditions.

Keywords: Economie; quantitative (search for similar items in EconPapers)
Date: 2014
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-01474417
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Published in Economic Development and Cultural Change, 2014, 63 (1), pp.117‐153. ⟨10.1086/677908⟩

Downloads: (external link)
https://amu.hal.science/hal-01474417/document (application/pdf)

Related works:
Working Paper: The Informal Sector Wage Gap: New Evidence using Quantile Estimations on Panel Data (2013) Downloads
Working Paper: The Informal Sector Wage Gap: New Evidence using Quantile Estimations on Panel Data (2013) Downloads
Working Paper: The Informal Sector Wage Gap: New Evidence Using Quantile Estimations on Panel Data (2009) Downloads
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:hal:journl:hal-01474417

DOI: 10.1086/677908

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2025-03-19
Handle: RePEc:hal:journl:hal-01474417