Informal and Formal Sector Participation and Earnings in a LDC: The Importance of Time and Migration

Peter Karpestam

No 2011:3, Working Papers from Lund University, Department of Economics

Abstract: Theoretical and empirical research points to potentially different patterns of labor recruitment and importance of social networks in the formal and informal sector. The paper touches upon this topic and investigates the conjecture that employment chances and expected earnings depend differently on individuals’ allocation of time and mobility patterns in the informal and formal sector. This is investigated in a LDC context using a household survey from Guatemala (Encovi 2000). The results suggest that the probability to obtain employment in agriculture (informal sector) increases with the amount of time spent at the current residence. The results are reversed for (informal) uncovered wage workers. For the (informal) self-employed and the formal sector (covered wage workers) the results does not display any evident patterns. Merging all segments of the informal sector, the results show that expected earnings in the informal sector are slightly reduced by time not spent at the current residence.

Keywords: The Informal Sector; Labor; Migration; Time; Central America; Guatemala. (search for similar items in EconPapers)
JEL-codes: D13 J60 J70 O17 R23 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2011-01-18
New Economics Papers: this item is included in nep-lab and nep-mig
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lunewp:2011_003

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