The informal sector wage gap : new evidence using quantile estimations on panel data

Files in This Item:
File Description SizeFormat 
gearywp200916.pdf501.68 kBAdobe PDFDownload
Title: The informal sector wage gap : new evidence using quantile estimations on panel data
Authors: Bargain, Olivier
Kwenda, Prudence
Permanent link: http://hdl.handle.net/10197/2673
Date: Jun-2009
Abstract: This paper provides new evidence on the wage gap between informal and formal salary workers in South Africa, Brazil and Mexico. We use rich datasets that allow us to define informality in a relatively comparable fashion across countries. We compute precise wage differentials by accounting for taxes paid in the formal sector. For each country, we analyze how the sector wage gap varies within groups, between groups and over time. To account for unobserved heterogeneity, we use large (unbalanced) panels to estimate fixed effects models at the mean and at different quantiles of the wage distribution. We find that unobserved heterogeneity explains a large part of the (conditional) wage gap. The remaining informal sector wage penalty is large in the lower part of the distribution but almost disappears at the top. The penalty primarily concerns young workers and is found to be procyclical. We carefully investigate the robustness of these results and discuss their policy implications as well as regularities across countries.
Funding Details: Not applicable
Type of material: Working Paper
Publisher: University College Dublin. Geary Institute
Keywords: Wage gapInformal sectorQuantile regressionFi…xed effects modelSelection
Subject LCSH: Wage differentials
Informal sector (Economics)
Regression analysis
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Geary Institute Working Papers

Show full item record

Page view(s) 50

109
checked on May 25, 2018

Download(s) 20

264
checked on May 25, 2018

Google ScholarTM

Check


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.