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What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh

Minhaj Mahmud, Italo Gutierrez, Krishna B. Kumar () and Shanthi Nataraj
Additional contact information
Krishna B. Kumar: RAND

No 12121, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using a choice experiment among 2,000 workers in Bangladesh, we to elicit willingness to pay (WTP) for specific job benefits typically associated with formal employment. We find that workers value job stability the most; the average worker would be willing to forego a 27 percent increase in monthly income in order to obtain a 1-year written contract (relative to no contract), or to forego a 12 percent increase to obtain thirty days of termination notice. On average, government workers place a higher value on contracts than do private sector employees, while casual workers particularly value higher pay. Our use of choice experiments to overcome the challenges associated with estimating WTP for specific job benefits from hedonic wage regressions or from observed job transitions is of interest in its own right, especially in a developing country context where data on worker transitions are unavailable and many workers are informally employed.

Keywords: discrete choice experiments; worker benefits; informality (search for similar items in EconPapers)
JEL-codes: J32 J46 J81 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2019-01
New Economics Papers: this item is included in nep-dcm, nep-dev, nep-hrm, nep-iue and nep-lma
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Related works:
Working Paper: What Aspects of Formality Do Workers Value ? Evidence from a Choice Experiment in Bangladesh (2020) Downloads
Working Paper: What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh (2017) Downloads
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