Self-employment, wage employment and informality in a developing economy

Arbeitspapier

We construct a simple model incorporating various urban labour market phenomena obtaining in developing economies. Our initial formulation assumes an integrated labour market and allows for entrepreneurship, self-employment and wage employment. We then introduce labour market segmentation. In equilibrium voluntary and involuntary self-employment, formal and informal wage employment, and formal and informal entrepreneurship may all coexist. We illustrate the model by an example calibrated on Latin American data, examining individual labour market transitions and implications of education/training and labour market policies. To diminish informality, cutting the costs of formality is more effective than raising those of informality.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6406

Classification and Topics

• Classification: Wirtschaft ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; Labor Demand
• Subject: self-employment ; wage employment ; informality ; Städtischer Arbeitsmarkt ; Selbstständige ; Arbeitskräfte ; Schwarzarbeit ; Unternehmer ; Informeller Sektor ; Arbeitsmarktsegmentierung ; Theorie ; Lateinamerika

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bennett, John ; Rablen, Matthew D.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/58493
• URN: urn:nbn:de:101:1-201206146915
• Last update: 10.03.2025, 11:42 AM CET