Competitive and Segmented Informal Labor Markets

Andrey Launov () and Isabel Günther

No 16, Proceedings of the German Development Economics Conference, Berlin 2006 from Verein für Socialpolitik, Research Committee Development Economics

Abstract: It has recently been argued that the informal sector in developing countries shows a dual structure, with part of the informal sector being competitive to the formal sector and part of the informal sector being the result of market segmentation. We formulate an econometric model to test this hypothesis. The model allows for sector multiplicity with unobserved sector affiliation in the informal sector and takes into account sample selection bias induced by the employment decision of individuals. An estimation of the model for the urban labor market in Côte d'Ivoire shows that the informal labor market is indeed composed of two segments with both competitive as well as segmented employment.

Keywords: informal labor market; segmentation; comparative advantage; selection bias; latent structure; finite mixture (search for similar items in EconPapers)
JEL-codes: J42 O17 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (27)

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Related works:
Working Paper: Competitive and Segmented Informal Labor Markets (2007)
Working Paper: Competitive and Segmented Informal Labor Markets (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:gdec06:4739

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