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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3151

Classification and Topics

• Classification: Wirtschaft ; Wage Level and Structure; Wage Differentials
• Subject: Informal sector ; wage penalty ; South Africa ; Lohnstruktur ; Informeller Sektor ; Südafrika

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Badaoui, Eliane ; Strobl, Eric ; Walsh, Frank A.
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/34531
• Last update: 10.03.2025, 11:44 AM CET