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on Informal and Underground Economics |
| By: | Jose Aurazo; Farid Gasmi |
| Abstract: | Low financial inclusion and high labor informality are two major challenges in developing countries. Using Peruvian survey data from 2015-18, we explore the dynamic relationship between these two variables by examining how labor informality and movements between formal and informal jobs may affect the transition probabilities of financial inclusion. First, we find that becoming informally employed reduces the probability of entering the formal financial system by 8 percentage points (pp) and increases the likelihood of exiting from it by 9.3 pp. Relative to persistently informal workers, those who stay in formal jobs have a 9 pp higher probability of gaining access to bank accounts, and 12 pp lower probability of losing access. Workers who move into formal jobs are more likely to enter the formal financial system by 9.7 pp and less likely to exit from it by 7.1 pp. These results underscore the complementarity of formalizing the informal sector and expanding access to financial services. |
| Keywords: | financial inclusion, labor informality, transition probabilities, dynamic random-effect panel probit |
| JEL: | C23 D14 E26 I31 O17 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1200 |
| By: | Esa A. Asyahid (Department of Economics, Faculty of Economics & Business, Universitas Gadjah Mada); Elan Satriawan (The National Team for Acceleration of Poverty Reduction (TNP2K)) |
| Abstract: | The dualistic market model suggests that self-employment in developing countries should be seen as a survival strategy that is taken by those who are locked out of the formal labour market rather than as a manifestation of entrepreneurial spirit. This study aims to provide empirical evidences on the nature of self-employment in Indonesia, and whether it is more appropriately seen as an entrepreneurial activity or merely as a survival mechanism, by examining self-employed workers’ characteristics and the determinants of entry and exit into the self-employment sector. Utilising individual-level panel data from the Indonesian Family Life Survey, this study finds that the self-employment sector in Indonesia is indeed better characterised as a survival strategy as in the dualistic market model. Moreover, entry into the self-employment sector arises in times of economic crisis, implying that it acts as an employment option, namely as a last resort. Consequently, instead of focusing on growing the business of self-employed workers, policies should be directed toward the relaxation of formal labour market entry constraints‒providing more decent jobs and protecting the livelihood of existing self-employed workers. |
| Keywords: | Self-Employment, Indonesia, Dualistic Market Model |
| JEL: | E26 J46 O17 |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:gme:wpaper:202403002 |
| By: | Franco Laverde, Daniel E. (Universidad de los Andes) |
| Abstract: | En este trabajo, exploro los efectos distribucionales del salario mínimo en las 23 cabeceras de Colombia en el periodo comprendido entre 2008 y 2019. Dado que el salario mínimo es el mismo para todo el territorio nacional, utilizo el índice de Kaitz a nivel cabecera y rama de actividad con sus valores reales, tomando como referencia el percentil 75 de ingreso, para hacer comparaciones a partir de distintos niveles de incidencia del salario mínimo. Me concentro en el análisis del empleo particular y del trabajo por cuenta propia y separo a las personas ocupadas en formales e informales de acuerdo con la cotización a pensión. Encuentro que los incrementos en el índice de Kaitz se traducen en un efecto agrupador de la distribución salarial para los empleados particulares formales, a partir de mayores incrementos salariales de las personas con ingresos más cercanos al mínimo. En contraste, para los empleados particulares informales encuentro que un incremento del índice de Kaitz reduce el ingreso laboral y este efecto se acentúa en los cuantiles de menor ingreso. Para el trabajo por cuenta propia formal no encuentro distorsiones en la distribución del ingreso laboral, mientras que para el trabajo por cuenta propia informal encuentro un efecto negativo. Por consiguiente, mis resultados no soportan la existencia de un efecto faro en Colombia. Finalmente, encuentro cambios ligeros en las composiciones de empleo, sugiriendo traslados hacia la informalidad, el desempleo y la menor participación laboral. Así como, el número de horas trabajadas incrementa para las personas ocupadas informales. |
| Keywords: | Salario Mínimo; Distribución del Ingreso Laboral; Informalidad; Empleo Particular; Trabajo por Cuenta Propia; Efecto Faro; Efecto Agrupador. |
| JEL: | J31 J38 J46 K31 |
| Date: | 2024–07–25 |
| URL: | https://d.repec.org/n?u=RePEc:col:000089:021168 |