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Title:Is there an informal employment wage penalty? Evidence from South Africa PDF Logo
Authors:Badaoui, Eliane
Strobl, Eric
Walsh, Frank A.
Issue Date:2007
Series/Report no.:IZA Discussion Papers 3151
Abstract: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.
Subjects:Informal sector
wage penalty
South Africa
JEL:J31
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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