Formal Sector Employment Research Articles

Impact of the 2008 wage review on the public-private sector wage-gap in Cameroon

This paper examines the impact of the 2008 wage review on the public-private sector wage-gap in Cameroon. Specifically, the paper evaluates the determinants of participating in the labour market and choosing formal sector employment; assesses the correlates of wages in the public and private sectors using the 2005 and 2010 Cameroon employment and informal sector surveys; and investigates the role of access to endowments and returns to endowments in explaining the public-private sector wage-gaps in 2005 and 2010. To achieve these objectives, the paper employs the bivariate probit model, Mincerian wage equations and the Neuman-Oaxaca decomposition approach. Results indicate that before and after the wage review, public sector workers enjoyed a wage premium over their formal private sector counterparts, more so after the review – registering an impact of 0.032 log points. Findings also reveal that the human capital variables – education and experience – solidly contributed in mitigating the public-private sector wage-gap. These results show that the 2008 wage review helped to augment the public sector wage premium in Cameroon over the period under study. These findings are useful inputs in animating public-private sector debates on human capital development and the structure of wages in developing country settings.

Analysis Of Economic Vulnerability Among Elderly Widows In Khyber Pakhtunkhwa, Pakistan

In Pakistani society, elderly widows usually face economic problems. Poverty is considered one of the prominent problems of elderly widows. They are lacking education, formal employment experience, modernization, old age pension and control over property which promote poverty among them. The attitudes of family and society are also not cooperative towards elderly widows which intensify their economic vulnerability. This study has been conducted in District Dir lower, Khyber Pakhtunkhwa. Sample frame was available in the form of a list of elderly widows in the office of Pakistan Bait Ul Mal, Dir lower. After exempting the young widows (having age less than 60 years) from the list, the respondents were selected randomly from the list. Data has been collected from the respondents through in-depth interviews. This study reveals that most of the respondents are illiterate and hence ineligible for formal sector employment. They also do not get old age pension. The respondents are also deprived of the right to property inheritance. They are dependent upon others for the fulfillment of their basic needs. Education, formal sector employment and right to property inheritance can alleviate the poverty of elderly widows.

COVID-19 Containment and Food Security in the Global South

Population-level COVID-19 containment strategies have been particularly hard on the urban poor and vulnerable population groups such as female-headed households, children, youth, the homeless, informal sector employers and employees, casual workers, the unemployed, and migrants and refugees. As a direct result of the COVID-19 outbreak, a secondary pandemic of hunger and food insecurity is now impacting many of these groups. An effective and sustainable global response to the COVID-19 (and any further) viral pandemics must ensure that food security is an essential piece of the containment and mitigation puzzle.

Debt, Investment, and Growth in Developing Countries with Segmented Labor Markets

We introduce a new suite of macroeconomic models that extend and complement the Debt, Investment, and Growth (DIG) model widely used at the IMF since 2012. The new DIG-Labor models feature segmented labor markets, efficiency wages and open unemployment, and an informal non-agricultural sector. These features allow for a deeper examination of macroeconomic and fiscal policy programs and their impact on labor market outcomes, inequality, and poverty. The paper illustrates the model's properties by analyzing the growth, debt, and distributional consequences of big-push public investment programs with different mixes of investment in human capital and infrastructure. We show that investment in human capital is much more effective than investment in infrastructure in promoting long-run economic development when investments earn their average estimated returns. The decision about how much to invest in human capital versus infrastructure involves, however, an acute intertemporal trade-off. Because investment in education affects labor productivity with a long lag, it takes 15+ years before net national income, the private capital stock, real wages for the poor, and formal sector employment surpass their counterparts in a program that invests mainly in infrastructure. The ranking of alternative investment programs depends on the policymakers' social discount rate and on the weight of distributional objectives in the social welfare function.

Determinants of growth for the informal sector micro-enterprises: an empirical study in India

Informal sector enterprises constitute about 50 per cent of informal sector employment. If these enterprises can grow then poverty can be impacted substantially. Microcredit was visualized as a support to help micro-enterprises generate income and impact poverty. Studies across the globe suggest that the impact created by microcredit is not substantial. This mixed-method, two-phase study aims to identify the reason for lack of impact. Findings of the first phase exploratory study suggest that there are a few determinants of growth which are as critical as credit for growth. These determinants are market location, value chain, gender of the entrepreneur, investment, cluster, and entrepreneurship of the entrepreneur. In Phase 2 these determinants are confirmed through multinomial regression of data from a larger sample size in a different location. Credit is the control variable. All determinants except entrepreneurship are statistically significant in explaining the role of these determinants in the growth of micro-enterprises. These findings can inform policy about the components of enabling conditions for micro-enterprises.

Differences of job accessibility among formal and total employment and among car and public transit in the Mexico City Metropolitan Area. Exploring two models based on travel time

The present project studies the pattern of spatial variations of employment accessibility in the Mexico City Metropolitan Area. The question is to assess differences in employment accessibility according to transportation mode (car or public transit) used and between the formal employment sector and total employment (formal + informal sectors). Two indicators were explored at Traffic Analisys Zones (TAZ) level: gravity-based job accessibility (GBM) and the indicator developed by Shen (1998). We explored two data sources of travel times: the 2017 Household Origin Destination Survey and the region’s travel demand model TRANUS. Thus, there are four aspects of comparison in this evaluation of job accessibility: sources of travel time data (Tranus vs HODS17), methods (Shen vs GBM), type of employment data (total vs formal) and transportation modes (Car vs Transit). Notice that when doing each comparison, the rest of the aspects are kept constant. In the first two, absolute values of accessibility are not comparables. Both sources of travel time data followed different approaches in gathering the data, while both methods have different units as well as upper and lower limits. For this reason, when comparing job access results between sources of time data or between methods the objective is to determine the consistency and robustness of the results in base of the job access ranking among TAZs. Thus, the Spearman Rank Correlation (SRC) is the appropriate indicator to check the consistency in the accessibility estimations.Then, in the other two aspects of comparison (Total employment vs formal employment; Car vs Transit) absolute values and rankings of accessibility are relevant. These two aspects represent direct variables embedded in both accessibility equations and therefore offer insights about how these factors impact its estimation. Overall, the purpose of analyzing the importance of these variations was to select those estimations with the highest consistency between travel-time sources but included further differences according to employment-type data and transportation modes. This information offers insights into the nuances of these aspects in the disparity of intra-metropolitan accessibility.Our exploration of accessibility using the GBM shows an important variation in the metropolitan pattern according to employment data, travel-time sources and transportation mode. As a general description, jobs-rich areas in the inner city have the highest accessibility with a decrease in accessibility with increasing distance from the urban center, however this negative relationship is not as clear as in the Shen´s type model. This is an expected result with GBM since this model focuses on the supply side of the jobs market, i.e. employment urban cores are predominant areas of accessibility. Total employment dramatically increases accessibility and gives more consistent results between travel-time sources than does formal employment, probably due to the reinforcement of the role of land use in the estimation. Accessibility is always higher for car drivers than for transit users with TRANUS, while for HODS17 this remains true for the most part but with a few exceptions.The Shen´s indicator shows a more consistent spatial pattern of accessibility (spearman correlations close to 1) regardless of travel-time data, and transportation mode choice, demonstrating the robustness of the method. In general, the spatial pattern of accessibility in relation to the urban center is a line with a negative slope. The resulting Shen´s accessibility landscape was compared with the urban structure cited in the literature. Results show that areas with the highest employment accessibility are within the central agglomeration and the associated corridors along main highways at its perimeters, according to the urban structure reported by Suárez and Delgado (2009). The disparity in terms of location means that access in the TAZ with the highest accessibility record is 26% higher than the metropolitan accessibility average. As expected, the inclusion of total employment increases accessibility in comparison with only formal employment. Commuting by car reduces travel time, and although this increases accessibility overall, the increase is negligible when comparisons are made with the increment of accessibility from formal to total employment, or with the difference between the higher and lower ends of job access by public transit. These comparisons show that as opposed to transportation mode, locations of residence, in direct relation with its closeness to the urban employment centers, is the main factor affecting access to employment. As en example of how results can be used to guide goverment interventions we identified priority areas for accessibility improvement as those TAZs with the worst accessibility index and highest marginalization in both the State of Mexico and CDMX.

MODERN PRACTICE OF IDENTIFYING AND MEASURING THE INFORMAL ECONOMY

The analytical assessment of the consequences of system transformations and the development of effective economic policies stimulates the emergence of new variants of the theory of convergence of socio-economic systems. In connection with this, the importance of clarifying the general theoretical issues and considering the problems associated with new socio-economic trends, taking into account the peculiarities of development of different countries. The main directions of modern economic thought show the continuity of the improvement of well-known scientific views and the emergence of new scientific approaches that are in line with the needs of economic reality. The article attempts to comprehend the modern conceptual approach to the definition of an informal economy and to measure its scale in countries that are at different stages of economic development. Interest in the informal sector of the economy exists throughout the world. This is due to the fact that, contrary to the forecasts, the informal economy not only persists in low-income countries, but also develops in new forms in developed countries. In addition, modern scholars recognize that the informal economy is inextricably linked to the formal economy and contributes to the economy as a whole. The paper focuses on the possibilities of combining the conceptual and methodological framework used to measure employment in the informal sector and informal employment in developing countries and in developed countries. In addition, the article presents the tendencies of development and the profile of Ukrainian informal employment against the backdrop of contemporary world tendencies. The reduction of informal employment in Ukraine and its legalization requires, first of all, the implementation of anti-crisis employment policy measures. These measures require a scientifically sound integrated national employment promotion program aimed at ensuring a balanced supply and demand for labor based on productive employment. The practical value of scientific results is to provide an effective tool for analysing informal employment in countries with different income levels. This will allow for an effective economic policy aimed at minimizing possible social risks.

Informal Sector in India: Migration and Poverty Implications

For assessing the role of urbanization in reducing poverty this paper based on secondary datatries to examine the nature of relationship among urbanisation, migration and informal sector employment. Findings suggest that the informal sector also tends to attract migrants as the probability to get work opportunities in this sector could be high. Further, rural and urban poverty are inter-connected as rural to urban migration and informal sector employment and other state-specific characteristics are associated, though migration and urbanisation with its spill-over effects reduce both rural and urban poverty. Also,based onthe survey data for unincorporated enterprises, the paper examinesif the unorganized or informal manufacturing, trade and services have the potentiality to grow and contribute to the realization of the inclusive growth objective. The inter-sectoral linkages do not necessarily mean that productivity and wages improve in the informal sector if the units manage to receive business contract from the formal sector enterprises. In fact, a large body of the informal sector is seen to be unconnected to the formal sector and this independent segment is on the rise over time. Finally the paper argues for the introduction of an informal sector policy which may help reduce the welfare losses to labour employed at the lower rungs.

Natural Disasters and Informality: Are local labor markets impacted after an earthquake?

This article studies the probability of being part of informal labor markets after a natural disaster. We consider different concepts of labor market informality and use empirical definitions for employment in the informal sector and informal employment. Since the Ecuadorian earthquake may be considered a natural experiment, we perform a two stage identification strategy using both coarsened exact matching (CEM), and nonlinear difference in differences (DD) using individual panel data. We use a fully exogenous measurement of intensity (Peak Ground Acceleration, PGA), which is continuous, and has not been subject to possible arbitrariness in its definition. We found that the earthquake had a positive effect in the likelihood of being part of informal sector if workers are located in the affected areas; we also identified significant gender differences, since a causal effect for men was found, but not for women. When we use the concept of informality based in jobs (informal employment) instead of companies (informal sector), no robust evidence of a causal effect was found. Our results suggest that the government's reconstruction efforts could had attenuated the effect of the disaster over informality in the most affected zones.

Economic Recession, Informal Sector and Skilled–Unskilled Wage Disparity in a Developing Economy: A Trade-Theoretical Analysis

The paper analyses some selective aspects of economic crises, namely skilled-sector recession, reversed international migration of labour and decline in foreign capital inflow on the informal sector employment and wage rate in developing economies and seeks to explain the non-monotonic effect on the informal sector both across nations and within nation across sectors. In so doing, we develop three-sector General Equilibrium models under two different scenarios which may apply to a large class of emerging market economies. In the first model, we have a traded informal export sector, and the role of the non-traded informal sector in the presence of credit market imperfection is analysed in the second model. Skilled-sector recession produces a favourable (unfavourable) effect on the workers employed in the traded informal sector (non-traded informal sector) due to an induced complementary relationship between the high-skilled export sector and the informal sector. A fall in emigration level of skilled or unskilled worker and a decline in foreign capital inflow hurt the workers in the informal traded sector, while the workers in the non-traded informal sector gain. The results of the paper reflect contradictions of an emerging economy, which is essentially hybrid economics in which capitalist nucleus has a conditional-conditioning relationship with an archaic structure. JEL Codes: F13, J31

States Taking the Reins? Employment Verification Requirements and Local Labor Market Outcomes

We estimate the impact of state-level “E-Verify” legislation that mandates employment eligibility verification for private-sector workers. We document declines in formal sector employment and employment turnover after mandate passage, with effects concentrated among those likeliest to be work-ineligible. Using newly available data, we show that larger firms are far more likely to comply with mandates. Heterogeneity in adherence leads to substantial within-state employment spillovers from larger to smaller firms, as well as a reduction in the number of large firms. We find no evidence that work-ineligible populations relocate or that native-born workers’ labor market outcomes improve in response to mandates.

Import Competition, Formalization, and the Role of Contract Labor

The debate on the effects of import competition on sectoral composition of employment remains unsettled. Using the case of the Indian manufacturing sector and exploiting plausibly exogenous variation from Chinese imports, we provide the first causal evidence that higher import competition increases the share of the formal sector employment. We nd an increase in the level of formal sector employment, driven by firms in the top 50% of the productivity distribution, and in contrast, a fall in the informal sector employment. This labor reallocation from informal to formal enterprises is enabled by the usage of contract workers, who do not carry stringent ring costs and are usually not covered by trade unions. Our estimates imply that Chinese import competition led to an increase in the share of formal sector employment by 3.9 percentage points between 2000-2001 and 2005-2006, which suggests an increase in aggregate labor productivity by 3.28%. Our results are robust to an instrumental variables estimation, and controlling for a host of other potential trade channels and worker characteristics.

How women have fared in the labour market with China's rise as a global economic power

AbstractUnder a centrally planned system, China made significant achievements in gender equality. Half a century later, China has joined the ranks of upper‐middle‐income countries, and decades of rapid growth have accompanied major structural changes in the economy. We assess the evolution of women's economic opportunities during the period, focusing on labour force participation, occupational segregation, leadership in business, and the gender wage gap, as well as informal sector employment and migration. We undertake a review of existing research and conduct new empirical analysis using a combination of data sources, including four waves of Chinese population census data through 2010, and province‐level migration data. We focus especially on migrant women, a group typically excluded from similar studies. Although investments in human capital have advanced prospects for better‐paid jobs for women, we find that rapid economic growth has not alleviated discrimination against women rooted in cultural and social norms and that the implementation of existing laws designed to protect and support women needs to improve.

Economic Globalization, Informality and Informal Employment: The African Perspective

Economic Globalization has a twofold impact on working individuals in developing economies – a surge in informal economic activities and fragmentation of work on one hand and expansion of opportunities, on the other. Economic globalization also implies increasing helplessness in the face of developments in anonymous markets with incalculable consequences, erupting in cross-border division of labor and production. This trend is, and will remain, irreversible. We see globalization as a process that induces countries to embrace greater trade and financial integration. While some businesses in the informal sector have succeeded in finding new markets for their commodities and services, others have completely lost their jobs and industries have seen their profits decline and working conditions deteriorate. This paper evaluates cross-border trade spillover, resulting in a shift from secure forms of employment to insecure forms of self-employment, and informal sector employment transformations. We discover that, cross border trade and financial openness have a positive association with economic ‘informality’ growth and a negative association with labor employment in the informal services industry. The paper contributes to export promotion and import substitution industrialization policy in developing economies. Such policy will provide a safety buffer for the otherwise fragile retail industries, strengthen social protection, improve worker rights and create sustainable employment for informal sector workers.

Mobile money use and social health insurance enrolment among rural dwellers outside the formal employment sector: Evidence from Kenya.

The study set out to explore whether mobile money use (mobile phone-based financial services) increased the probability of rural dwellers outside the formal employment sector of being enrolled in Kenya's social health insurance, the National Hospital Insurance Fund (NHIF). We used data from the 2015 FinAccess Household Survey and analysed responses of 4282 rural individuals outside the formal employment sector. Probit and bivariate probit models were used and adjusted for mobile phone ownership, sex, age, age-squared, education, wealth quintile, bank account use, informal group membership, occupation, and health shocks. We found that 16.26% (95% CI, 14.58% to 18.10%) of mobile money users had NHIF cover as compared with 2.44% (95% CI, 1.83% to 3.23%) of nonusers. Importantly, mobile money use increased the probability of being enrolled in NHIF by 4.6% (95% CI, 2.1% to 7.1%) after controlling for confounders. Access to mobile money was associated with reduced travel time and lower transport costs, which are likely to be key mechanisms for increasing NHIF enrolment. By lowering transport costs and saving travel time, mobile money provides an easy means to pay social health insurance premiums thus incentivising its uptake among rural people outside of formal employment.

Changes in maternity leave coverage: Implications for fertility, labour force participation and child mortality

Analysing macro-panel data from 18 African and Asian countries over the period 1995–2016, this article investigates the effects of the level and duration of paid maternity leave on three dimensions of human development: fertility, female formal-sector employment and infant mortality. There is some evidence that, on average, extending the duration of leave leads to reductions in infant mortality and employment. However, there is no conclusive evidence that leave duration has a direct effect on fertility. In contrast, there is some evidence that higher maternity leave payments lead to higher fertility, but no evidence that payment levels have any effect on infant mortality or employment.

Changes in the Relationship Between Formal Education and Formal Employment Sector in Nepal Between 1995 and 2014

This paper uses seven individual-level surveys between 1995 and 2014 to analyse the hypothesis that formal education increases wage-employment and formal sector employment in Nepal. The results show that formal education has increased substantially. However, formal sector employment has remained relatively stable. Individuals with tertiary education are about twice as often employed in the formal sector than individuals without completed primary education. This relationship is less strong for secondary education (22%) and primary education (7%). The results further show that about half of the relationship arises from working in government-related sectors. The overall picture regarding the relationship between formal education and formal sector employment has remained similar over time. However, the strength of the relationship between completed primary and secondary education and formal sector employment has decreased over time. The relationship between tertiary education and formal sector employment has remained stable unless the government related sectors are excluded.

The Emergence of the Informal Sector: Labour legislation and politics in South India, 1940–60

AbstractThe informal sector and informal employment relations occupy a prominent place in India's economy: one of their key features is the apparent absence of the state from labour regulation. This article seeks to trace the emergence of the division between the formal and informal sectors in India's economy from a historical perspective: it shows how the state, far from being absent, played a fundamental role in creating the dichotomy. This is done through a close study of labour legislation and the politics around it, taking South India as a case study. The article examines the enactment of four laws in Madras province in the late 1940s, ostensibly aimed at protecting workers, and their subsequent implementation by the Madras government. It shows how these laws ended by excluding workers from small unorganized industries (such as beedi-making, arecanut-processing, handloom-weaving, and tanning) from legal protection. It explores the ramifications of this exclusion and argues that the reinforcement of the formal–informal divide was the outcome of a complex political struggle between employers, workers' unions, and the state during this formative period.

Changing Work Organisations and Implications for Decent Work: a Case Study of India’s Information Technology Industry

Workplaces of several industries in the twenty-first century are ergonomically and hierarchically different from those of the earlier days. Information technology industry is a classic example of one such industry in a developing country India. Unlike the workplaces in the manufacturing sector or the fields in the agriculture sector, information technology industry’s workplaces are sophisticated. This paper examines the nature and organisation of work in India’s information technology (IT) industry and its implications on the decent work status of the employees. Choice of IT industry has an underlying logic. Technically qualified youth as well as the general public perceive employment in IT industry as highly remunerative, productive, stable and safe and as a key to secure future. It also represents a typical formal sector employment. The research methodology consists of both quantitative and qualitative methods of research. Snowball sampling technique has been used to collect data on a sample of 272 IT employees in the geographical clusters of Delhi–NCR, Bangalore, Pune and Hyderabad region. Techniques of index construction and range equalisation method have been used to develop decent work index and decent workplace index. Besides, correspondence analysis, cluster analysis, multinomial logistic regression, phi correlation coefficient and Chi-square test have also been used to further analyse the results on the basis of various socio-demographic factors. The findings of the study have contradicted the general myth of work in formal sector jobs as only a small fraction of the sample was found to be availing decent work as per the various parameters of decent work. The deficit in decent work is due to nature of work in the IT industry. The research has developed tools and techniques of measuring and evaluating decent work at micro- and meso-level. Overall, the study is a pilot attempt to quantitatively measure decent work and its variations due to the nature of work organisation in an industry.

Formal sector workers’ participation in urban agriculture in Ghana: perspectives from the Wa Municipality

This paper assesses the participation of formal sector employees in urban agriculture and their contributions to food supply in the Wa Municipality, north-western Ghana. A cross-sectional research design was employed with survey as the data collection method. Respondents were randomly selected from various public sector agencies within the Municipality. Logistic regression was employed to identify the factors influencing participation in agriculture. The findings revealed that majority (62.1%) of the respondents were not participating in agriculture. Respondents who participate in urban agriculture practice food crop farming or animal rearing or both. The probability of a formal sector worker participating in agriculture is influenced by sex, age, education, household size, finance and formal workload. Participation in agriculture contributes to household food supply through physical availability of food, income earning and savings. Providing formal sector workers with information about the significance of urban agriculture could be a way of encouraging their participation.