scholarly journals Evaluating the wage differential between the formal and informal economy: a gender perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Colin Williams ◽  
Ardiana Gashi
Keyword(s):  
Informal Economy ◽  
Wage Differential ◽  
Decomposition Analysis ◽  
Informal Employment ◽  
Vulnerable Groups ◽  
Gender Perspective ◽  
Men And Women ◽  
Content Type ◽  
Wage Rates ◽  
Formal Employment

PurposeDespite a widespread assertion that wages are lower in the informal than formal economy, there have been few empirical evaluations of whether this is the case and even fewer studies of the gender variations in wage rates in the formal and informal economies. Consequently, whether there are wage benefits to formal employment for men and women is unknown. The aim of this paper is to evaluate the wage differential between formal and informal employment for men and women.Design/methodology/approachTo evaluate the wage differential between the formal and informal economy for men and women, data are reported from a 2017 survey involving 8,533 household interviews conducted in Kosovo.FindingsUsing decomposition analysis and after controlling for other determinants of wage differentials, the finding is that the net hourly earnings of men in formal employment are 26% higher than men in informal employment and 14% higher for women in formal employment compared with women in informal employment.Practical implicationsGiven the size of the wage differential, the costs for employers will need to significantly increase in terms of the penalties and risks of detection if informal employment is to be prevented, along with more formal employment opportunities using active labour market policies for vulnerable groups, perhaps targeted at men (who constitute 82.8% of those in informal employment).Originality/valueThis is one of the first studies to evaluate the differentials in wage rates in the formal and economy from a gender perspective.

scholarly journals Beyond the formal/informal employment dualism: evaluating individual- and country-level variations in the commonality of quasi-formal employment

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Colin Williams ◽  
Besnik Krasniqi
Keyword(s):  
Social Protection ◽  
Informal Institutions ◽  
Vulnerable Groups ◽  
The European Union ◽  
Content Type ◽  
Individual Level ◽  
Country Level ◽  
The United Kingdom ◽  
Formal Employment ◽  
The Individual

PurposeTo transcend the view of employment as either formal or informal, this paper evaluates the prevalence of quasi-formal employment where formal employers pay formal employees an unreported (“envelope”) wage in addition to their formal reported salary. To explain the individual-level variations in quasi-formal employment, the “marginalisation” thesis is evaluated that this practice is more prevalent among vulnerable groups and to explain the country-level variations, and a neo-institutionalist theory is evaluated that it is more prevalent where formal institutional failures lead to an asymmetry between the formal laws and regulations and the unwritten socially shared rules of informal institutions.Design/methodology/approachTo evaluate the individual- and country-level variations in the prevalence of quasi-formal employment, a multi-level logistic regression is provided of data from special 2019 Eurobarometer survey 92.1 involving 11,793 interviews with employees across 28 European countries (the 27 member states of the European Union and the United Kingdom).FindingsOf the 3.5% of employees (1 in 28) who receive under-reported salaries, the marginalisation thesis is supported that it is largely vulnerable population groups. So too is the neo-institutionalist explanation that quasi-formal employment is more common in countries where the non-alignment of formal and informal institutions is greater, with the formal institutional failings producing this identified as lower levels of economic development, less modernised state bureaucracies and lower levels of taxation and social protection.Practical implicationsThe policy implication is that tackling quasi-formal employment requires not only enforcement authorities to improve the risk of detection of this illegal wage practice but also governments to change wider macro-level structural conditions. These are outlined.Originality/valueContemporary new evidence is provided of the prevalence of quasi-formal employment along with how this illegal wage practice can be explained and tackled.

Gender segregation and wage differentials in India: the role of educational attainment and occupational choices

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Tushar Agrawal
Keyword(s):  
Rural Areas ◽  
Urban Areas ◽  
Wage Differential ◽  
Wage Gap ◽  
Decomposition Analysis ◽  
Joint Effect ◽  
Gender Segregation ◽  
Content Type ◽  
Information Index ◽  
Rural And Urban Areas

PurposeThe purpose of this paper is to examine the interrelation between two important dimensions of gender segregation: education and occupation. It further investigates the gender wage gap.Design/methodology/approachThe author uses a three-way additive decomposition of the mutual information index – an index based on the concept of entropy. A non-parametric wage decomposition method that uses matching comparisons is used for measuring the wage gap.FindingsThe results show that the extent of gender segregation in India is higher in urban areas than that in rural areas. Most of the observed segregation in rural labour markets originates from educational outcomes, whereas in urban markets it is due to occupational profile of individuals. The findings of the wage decomposition analysis suggest that education in rural areas also explains a sizeable part of the gender wage differential. Nevertheless, a large share of the wage gap remains unexplained in both rural and urban areas.Originality/valueWhile much research has looked at occupational segregation, less attention has been paid to educational segregation. The paper uses a unique approach to understand the joint effect of occupation and education in explaining gender segregation.

scholarly journals Gender, Informal Employment and Trade Liberalization in Mexico

2019 ◽  
Vol 34 (2) ◽  
pp. 259-283
Author(s):  
Sarra Ben Yahmed ◽  
Pamela Bombarda
Keyword(s):  
Trade Liberalization ◽  
Manufacturing Sector ◽  
Manufacturing Industries ◽  
Informal Employment ◽  
Large Firms ◽  
Men And Women ◽  
Male And Female ◽  
Labor Reallocation ◽  
Formal Employment ◽  
Service Sectors

Abstract This paper studies how import liberalization affects formal employment across gender. The theory offers a mechanism to explain how male and female formal employment shares can respond differently to trade liberalization through labor reallocation across tradable and nontradable sectors. Using Mexican data over the period 1993–2001, we find that Mexican tariff cuts increase the probability of working formally for both men and women within four-digit manufacturing industries. The formalization of jobs within tradable sectors is driven by large firms. Constructing a regional tariff measure, we find that regional exposure to import liberalization increases the probability of working formally in the manufacturing sector for both men and women, and especially for men. However in the service sectors, the probability of working formally decreases for low-skilled women.

scholarly journals How close are formal and informal work?

2017 ◽  
Vol 37 (7/8) ◽  
pp. 374-386 ◽  
Author(s):  
Joanna Shapland ◽  
Jason Heyes
Keyword(s):  
Informal Economy ◽  
Government Regulation ◽  
Working Environment ◽  
Informal Work ◽  
Content Type ◽  
Formal Economy ◽  
Informal Economies ◽  
Formal Employment ◽  
The Uk ◽  
Government Statistics

Purpose Recent changes in the UK to the regulation and modes of work in the formal and informal economies are considered. Research in this field has tended to remain in silos (treating formal economy working conditions separately from research on the informal economy). The question is whether the means of work and benefits to the worker for formal and informal work are now as different as the former images of formal and informal economy work imply under a “jobs-for-life” economy. The purpose of this paper is to consider whether the current aim of government regulation of the informal economy – to formalise it – is actually of benefit to workers, as might be supposed. Design/methodology/approach This paper considers recent research findings on the formal and informal economy, using official government statistics for the UK and more detailed European studies on the informal economy. Findings This paper argues that formal employment in the UK is becoming more casualised, with less associated benefits to employees. Though it is still of benefit to the state to formalise informal work (to increase tax take), some of the links between formalisation and a good working environment for workers are being broken, which may lead to the informal economy becoming more popular and requiring different priorities in its regulation. Originality/value This paper argues that we need to change our assumptions and image of work in the formal economy, compared to that in the informal economy.

scholarly journals Employment in the informal economy: implications of the COVID-19 pandemic

2020 ◽  
Vol 40 (9/10) ◽  
pp. 1005-1019
Author(s):  
Aleksandra Webb ◽  
Ronald McQuaid ◽  
Sigrid Rand
Keyword(s):  
Informal Economy ◽  
Government Support ◽  
Informal Employment ◽  
Social Implications ◽  
Content Type ◽  
Informal Workers ◽  
Basic Work ◽  
Narrative Literature ◽  
Work Security ◽  
Narrative Literature Review

PurposeAlthough the coronavirus (COVID-19) pandemic appears to disproportionately affect those in informal employment, they often receive less government support than the formally employed. This paper considers definitions of the informal economy and informal employment, explores the rationale for participating in the informal economy and reflects on some effects of the pandemic on these workers.Design/methodology/approachThe paper presents a narrative literature review with analysis of the selected academic and policy literature.FindingsThere are considerable short- and long-term implications of the pandemic for informal employment and the informal economy. This occurs against the background of unresolved tensions arising from informal workers' desire for more employment security and employers' striving for continued labour flexibility while transferring costs to government and workers. The COVID-19 pandemic might accelerate current trends and force new solutions to better protect basic work security while helping organisations to remain competitive. Government policies supporting work safety, income security, moves to formalisation of employment and fairness for informal employees are particularly important.Research limitations/implicationsAs statistical and qualitative evidence is currently limited, it is too early to identify the full effects of COVID-19 on employment in the informal economy.Practical implicationsThe results suggest that governments need to carefully consider explicit support for those in informal employment to create fair, resilient and ethical structures for workers, businesses, economies and wider societies.Social implicationsThe paper identifies some of the social implications of COVID-19 for the informal sector.Originality/valueThe analysis offers initial insights into the impacts of a major health, economic and social shock on informal working.

More Turks could lose jobs as COVID-19 plays out

2020 ◽  
Keyword(s):  
Income Inequality ◽  
Young People ◽  
Labour Market ◽  
Birth Rate ◽  
Social Assistance ◽  
Child Labour ◽  
The Self ◽  
Informal Employment ◽  
Content Type ◽  
Formal Employment

Significance Hurriyet Editor-in-chief Ahmet Hakan has queried whether Turkey is becoming a society without class or privilege. Well-intentioned anti-crisis policies have widened inequalities between those in formal employment, informal employment and the self-employed. This could stoke tensions in a polarised society where income inequality is already pronounced. Impacts Young people will try to emigrate but for most this will not be possible, while the birth rate could well decline. Social and economic modernisation will slow, with women more dependent on male relatives and young people on their families. Most refugees will continue to need assistance to meet basic needs and to counter child labour and irregular emigration. Social assistance, labour market and employment policies will require retuning and demand more attention and resources than before.

Impact sourcing for employment of persons with disabilities

2020 ◽  
Vol 16 (4) ◽  
pp. 361-380
Author(s):  
Katsuo Matsumoto
Keyword(s):  
Case Studies ◽  
Informal Economy ◽  
Local Governments ◽  
Service Providers ◽  
Social Enterprises ◽  
Persons With Disabilities ◽  
Content Type ◽  
Formal Employment ◽  
The Impact

Purpose Using case studies of business process outsourcing enterprises in India, this study aims to discuss how impact sourcing is used to provide employment opportunities to persons with disabilities (PWDs) and summarizes the business factors associated with successful impact sourcing for PWDs. Design/methodology/approach The effect of impact sourcing on the employment of PWDs is a newly emerging phenomenon, and this study focuses on the impact-sourcing mechanism and investigates whether such sourcing contributes to promoting PWD employment in India. It does so by examining the business model characteristics of organizations through case studies. Findings The results show that effective training systems and operational styles enable continuous market competitiveness for social enterprises. The case studies also demonstrate that it is possible to expand businesses by transferring and replicating management know-how through an organization’s operating model. It also highlights the catalytic role of impact sourcing service providers in promoting formal PWD employment in a labor market where the informal economy is dominant. Central and local governments’ support for social enterprises may promote formal employment of PWDs, an internationally-recognized goal. Originality/value Impact sourcing for PWDs is an emerging field. This study offers a new contribution to existing work integration social enterprises literature by providing new insight into effective ways of achieving employment for PWDs through outsourcing business. This study highlights the important role of social enterprises in achieving formal employment of PWDs.

scholarly journals Explaining the informal economy in Western Europe: beyond a rational economic actor perspective

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Colin Williams ◽  
Gamze Oz-Yalaman
Keyword(s):  
Informal Economy ◽  
Western Europe ◽  
Alternative Theory ◽  
Probit Regression ◽  
Content Type ◽  
Social Actors ◽  
The United Kingdom ◽  
Economic Actor ◽  
Expected Benefits ◽  
Practical Implications

PurposeThe dominant theorisation of the informal economy views participants as rational economic actors operating in the informal economy when the expected benefits exceed the perceived costs of being caught and punished. Recently, an alternative theory has emerged which views participants as social actors operating in the informal economy due to their lack of vertical trust (in governments) and horizontal trust (in others). The aim of this paper is to evaluate these competing theorisations.Design/methodology/approachTo do so, data are reported from special Eurobarometer surveys conducted in 2007, 2013 and 2019 in eight West European countries (Austria, Belgium, France, Germany, Ireland, Luxembourg, the Netherlands and the United Kingdom).FindingsUsing probit regression analysis, the finding is that increasing the expected likelihood of being caught and level of punishment had a weak significant impact on the likelihood of participating in the informal economy in 2007, and there was no significant impact in 2013 and 2019. However, greater vertical and horizontal trust is significantly associated with a lower level of participation in the informal economy in all three time periods.Practical implicationsThe outcome is a call for a policy to shift away from increasing the expected level of punishment and likelihood of being caught, and towards improving vertical and horizontal trust. How this can be achieved is explored.Originality/valueEvidence is provided in a Western European context to support a shift away from a rational economic actor to a social actor approach when explaining and tackling the informal economy.

Socioeconomic effects of pension spending: evidence from Spain

2020 ◽  
Vol 47 (5) ◽  
pp. 599-617
Author(s):  
Fernando Bermejo ◽  
Eladio Febrero ◽  
Andre Fernandes Tomon Avelino
Keyword(s):  
Peer Review ◽  
Social Protection ◽  
Pension System ◽  
Decomposition Analysis ◽  
Value Added ◽  
Total Output ◽  
Alternative View ◽  
Input Output ◽  
Structural Decomposition Analysis ◽  
Content Type

PurposeThe purpose of this study is to provide broader understanding of the significant role that the pension system has in the Spanish economy by estimating the sectoral production, employment and income sustained by pensioners' consumption.Design/methodology/approachBased on input–output tables by the World Input–Output Database and consumption data from the Household Budget Survey by the Spanish Statistical Office, a demoeconomic model is applied to quantify the direct impacts, indirect impacts from interindustry links and induced impacts from income–consumption connections over a nine-year period (2006–2014). Then, the factors driving the evolution of total output, employment and value added during such period have been examined by using structural decomposition analysis.FindingsThe growing participation of consumption by pensioner households in final demand had proven crucial during the 2008 crisis to alleviate the negative trend in production and employment derived from the collapse in consumption suffered by the rest of households.Practical implicationsDetermining the underlying factors driving changes in both employment and income during the 2008 crisis can be of interest in political decision-making on the sustainability of the Spanish pension system.Social implicationsThe results of estimating both the employment and income supported by pensioners' consumption reveal the significant stabilizing effect of the public spending on pensions, particularly during the 2008 crisis.Originality/valueThe current Spanish approach of attaining the pension system sustainability by merely reducing social protection costs ignores the adverse consequences of a lower pensioners' demand. This paper addresses an alternative view in which pension spending is not considered a burden on economic growth but rather a means of improving the level of production and employment.Peer reviewThe peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-01-2019-0047

scholarly journals Income-related health inequality among Chinese adults during the COVID-19 pandemic: evidence based on an online survey

2021 ◽  
Vol 20 (1) ◽  
Author(s):  
Peng Nie ◽  
Lanlin Ding ◽  
Zhuo Chen ◽  
Shiyong Liu ◽  
Qi Zhang ◽  
...  
Keyword(s):  
Mental Health ◽  
Physical Activity ◽  
Health Outcomes ◽  
Family Member ◽  
Health Inequalities ◽  
Online Survey ◽  
Mainland China ◽  
Decomposition Analysis ◽  
National Sample ◽  
Vulnerable Groups

AbstractBackgroundPartial- or full-lockdowns, among other interventions during the COVID-19 pandemic, may disproportionally affect people (their behaviors and health outcomes) with lower socioeconomic status (SES). This study examines income-related health inequalities and their main contributors in China during the pandemic.MethodsThe 2020 China COVID-19 Survey is an anonymous 74-item survey administered via social media in China. A national sample of 10,545 adults in all 31 provinces, municipalities, and autonomous regions in mainland China provided comprehensive data on sociodemographic characteristics, awareness and attitudes towards COVID-19, lifestyle factors, and health outcomes during the lockdown. Of them, 8448 subjects provided data for this analysis. Concentration Index (CI) and Corrected CI (CCI) were used to measure income-related inequalities in mental health and self-reported health (SRH), respectively. Wagstaff-type decomposition analysis was used to identify contributors to health inequalities.ResultsMost participants reported their health status as “very good” (39.0%) or “excellent” (42.3%). CCI of SRH and mental health were − 0.09 (p < 0.01) and 0.04 (p < 0.01), respectively, indicating pro-poor inequality in ill SRH and pro-rich inequality in ill mental health. Income was the leading contributor to inequalities in SRH and mental health, accounting for 62.7% (p < 0.01) and 39.0% (p < 0.05) of income-related inequalities, respectively. The COVID-19 related variables, including self-reported family-member COVID-19 infection, job loss, experiences of food and medication shortage, engagement in physical activity, and five different-level pandemic regions of residence, explained substantial inequalities in ill SRH and ill mental health, accounting for 29.7% (p < 0.01) and 20.6% (p < 0.01), respectively. Self-reported family member COVID-19 infection, experiencing food and medication shortage, and engagement in physical activity explain 9.4% (p < 0.01), 2.6% (the summed contributions of experiencing food shortage (0.9%) and medication shortage (1.7%),p < 0.01), and 17.6% (p < 0.01) inequality in SRH, respectively (8.9% (p < 0.01), 24.1% (p < 0.01), and 15.1% (p < 0.01) for mental health).ConclusionsPer capita household income last year, experiences of food and medication shortage, self-reported family member COVID-19 infection, and physical activity are important contributors to health inequalities, especially mental health in China during the COVID-19 pandemic. Intervention programs should be implemented to support vulnerable groups.

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