The purpose of this essay is to argue that process-regarding preferences or social norms are pervasive in traditional village communities, yet are subject to gradual erosion under the influence of new forces, particularly population growth and market penetration. This is illustrated with respect...

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...

The literature has mixed results on how formal insurance affects informal risk sharing. Whether such effect is motivated extrinsically or intrinsically also remains unclear. We design a lab experiment in which formal insurance is introduced and removed unexpected and the insurance purchase...

This paper addresses the issue of the gender pay gap in the formal and informal labour markets in Poland. The authors verify the hypothesis of the existence of a gender pay gap in informal work and compare this gap with the one observed in the formal (registered) labour market. Various analyses...

Die WES-Sonderfragen für das vierte Quartal 2019 befassen sich mit dem Ausmaß und den Wirkungen der Schattenwirtschaft. Die Teilnehmer wurden gebeten, Fragen zum Ausmaß der Schattenwirtschaft in den einzelnen Ländern, zu den Gründen für Schattenwirtschaft und zu den Sektoren, die...

We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous firms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual simulations to understand how trade affects...

Informality has long been a salient phenomenon in developing country labor markets, thus has been addressed in several theoretical and empirical research. Turkey, given its economic and demographic dynamics, provides rich evidence for a growing, heterogeneous and multifaceted informal labor...

This paper examines the earnings penalties and premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employees, and formal wage employees....

We model the organizational choice of a small firm given formal and informal credit market parameters. We observe a positive relationship between the size of the informal sector and the spread across countries. We take spread as relative inefficiency of the formal credit markets. Furthermore we...