Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92301
Authors: 
Bennett, John
Gould, Matthew
Rablen, Matthew D.
Year of Publication: 
2012
Citation: 
[Journal:] IZA Journal of Labor & Development [ISSN:] 2193-9020 [Publisher:] Springer [Place:] Heidelberg [Volume:] 1 [Year:] 2012 [Pages:] 1-17
Abstract: 
We model an urban labour market in a developing economy, incorporating workers' risk attitudes. Trade-offs between risk aversion and ability determine worker allocation across formal and informal wage employment, and voluntary and involuntary self employment. Greater risk of informal wage non-payment can raise or lower informal wage employment, depending on the source of risk. Informal wage employment can be reduced by increasing detection efforts or by strengthening contract enforcement for informal wage payment. As the average ability of workers rises, informal wage employment first rises, then falls. Greater demand for formal production may lead to more involuntary self employment.
Subjects: 
risk attitudes
informality
self employment
JEL: 
O17
J23
D81
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/2.0/
Document Type: 
Article
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