The formal sector wage premium and firm size

Eliane El Badaoui, Eric Strobl () and Frank Walsh

Open Access publications from School of Economics, University College Dublin

Abstract: We show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labor taxes, then large-high wage firms will be in the formal and small-low wage firms will be in the informal sector. The formal sector wage premium is thus just a firm size wage differential. Using data from Ecuador we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists.

Keywords: Formal sector wage premium; Firm size; Trinidad-and-tobago; Labor-market; Developing-countries; Informal sector; Propensity score; Employer size; Unemployment; Differentials; Consequences; Taxation (search for similar items in EconPapers)
JEL-codes: J31 O17 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2010-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Published in: Journal of Development Economics, 91(1) 2010-01

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http://hdl.handle.net/10197/8052 Open Access version, 2010 (application/pdf)

Related works:
Journal Article: The formal sector wage premium and firm size (2010)
Working Paper: The Formal Sector Wage Premium and Firm Size (2010)
Working Paper: The Formal Sector Wage Premium and Firm Size (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:oapubs:10197/8052

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