This paper defines informal sector employment and decomposes the difference in earnings between formal and informal … and considering self-selection of individuals into different employment types, we find a significant informal employment …

This paper evaluates the effects of a fall in payroll taxes on employment and wages in the presence of high labor … formality. The model suggests that the reform would increase total employment by between 0.3 to 0.5 percent and formal … employment by between 3.4 to 3.7 percent over the pre-reform scenario. In addition, formal wage rates would increase by 4 …