Self-Employment, Wage Employment and Informality in a Developing Economy

John Bennett () and Matthew Rablen

No 6406, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We construct a simple model incorporating various urban labour market phenomena obtaining in developing economies. Our initial formulation assumes an integrated labour market and allows for entrepreneurship, self-employment and wage employment. We then introduce labour market segmentation. In equilibrium voluntary and involuntary self-employment, formal and informal wage employment, and formal and informal entrepreneurship may all coexist. We illustrate the model by an example calibrated on Latin American data, examining individual labour market transitions and implications of education/training and labour market policies. To diminish informality, cutting the costs of formality is more effective than raising those of informality.

Keywords: self-employment; wage employment; informality (search for similar items in EconPapers)
JEL-codes: J23 O17 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-03
New Economics Papers: this item is included in nep-dev, nep-ent, nep-iue and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Oxford Economic Papers, 2015, 67 (2), 227-244

Downloads: (external link)
https://docs.iza.org/dp6406.pdf (application/pdf)

Related works:
Journal Article: Self-employment, wage employment, and informality in a developing economy (2015)
Working Paper: Self-Employment, Wage Employment and Informality in a Developing Economy (2012)
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:iza:izadps:dp6406

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().