Is there an informal employment wage penalty? Evidence from South Africa

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Title: Is there an informal employment wage penalty? Evidence from South Africa
Authors: Walsh, Frank
Badaoui, Eliane
Strobl, Eric
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Date: Apr-2008
Abstract: We estimate the wage penalty associated with working in the South African informal sector. To this end we use a rich data set on non-self employed males that allows one to accurately distinguish workers employed in the informal sector from those employed in the formal sector and link individuals over time. Implementing various econometric approaches we find that there is a gross wage penalty of a little over 18 per cent for working in the informal sector. However, once we reduce our sample to a group for which we can reasonably calculate earnings net of taxes and control for time invariant unobservables the wage penalty disappears.
Type of material: Journal Article
Publisher: University of Chicago Press
Copyright (published version): Copyright 2008 by The University of Chicago
Keywords: Informal sectorWage penaltySouth Africa
Subject LCSH: Informal sector (Economics)--South Africa
Wages--South Africa
DOI: 10.1086/533550
Language: en
Status of Item: Peer reviewed
Appears in Collections:Economics Research Collection

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