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The formal sector wage premium and firm size
Author(s)
Date Issued
2010-01
Date Available
2016-10-13T12:35:04Z
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.
Type of Material
Journal Article
Publisher
Elsevier
Journal
Journal of Development Economics
Volume
91
Issue
1
Start Page
37
End Page
47
Copyright (Published Version)
2009 Elsevier
Classification
J31
O17
Language
English
Status of Item
Peer reviewed
This item is made available under a Creative Commons License
File(s)
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Name
informal_rev18.pdf
Size
413.65 KB
Format
Adobe PDF
Checksum (MD5)
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