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Title:Competitive and Segmented Informal Labor Markets PDF Logo
Authors:Launov, Andrey
Günther, Isabel
Issue Date:2006
Series/Report no.:Proceedings of the German Development Economics Conference, Berlin 2006 / Verein für Socialpolitik, Research Committee Development Economics 16
Abstract:It has recently been argued that the informal sector in developing countries shows a dual structure, with part of the informal sector being competitive to the formal sector and part of the informal sector being the result of market segmentation. We formulate an econometric model to test this hypothesis. The model allows for sector multiplicity with unobserved sector affiliation in the informal sector and takes into account sample selection bias induced by the employment decision of individuals. An estimation of the model for the urban labor market in Cte d'Ivoire shows that the informal labor market is indeed composed of two segments with both competitive as well as segmented employment.
Subjects:informal labor market
segmentation
comparative advantage
selection bias
latent structure
finite mixture
JEL:O17
J42
Document Type:Conference Paper
Appears in Collections:Proceedings of the German Development Economics Conference, 2006 (Berlin)

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