Informal Employment and Income: A Case Study in Tra Vinh Province

Abstract

This paper investigates the impact of the informal economy on the economy, focusing on the relationship between informal employment and the incomes of workers in Tra Vinh province. The empirical modelling employs OLS regression with cross-sectional VHLSS data for the Tra Vinh province covering the period 2004-2018. A labor-based approach of is applied to measure the informality of workers. Accordingly, the workers in the occupational groups who work independently are self-employed, and work for the family business is considered informal employment, while the other group is considered formal employment. The results of the study indicate that the informal employment have the lower incomes in the shor and long term. Beside that, the orther sectors including gender, education, the number of working hours, and skill levels have too a highly significant impact on workers' incomes. All policy implications of the study lead to the goal of improving working conditions for workers in the informal economy. Accordingly, the proposed policies include the synchronization between employment policies and labor supply and demand in the market, which focuses on vocational training for workers, provides solutions to ensure legality for employees and set up a databate on labor supply and demand.