Heterogeneity in the informal sector and transitions between states. A long-term analysis for the Argentine labor market
No. 92 (2022-10-01)Author(s)
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Luis Alberto Beccaria
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Sonia Marina Filipetto
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Nahuel Mura
Abstract
There is much debate around whether labor informality reflects situations of exclusion or whether it constitutes a valuable alternative for those who work in this sector. This paper contributes to the discussion by comparing the characteristics of those who move from the formal to the informal sector with the characteristics of those who remain in formal sector jobs during the 1995-2019 period in Argentina. Multinomial choice models are used for this purpose. The influence of such movements on the variation of wages is also evaluated. Both sets of evidence reveal that the positions in the informal sector, taken as a whole, do not seem to constitute a desirable destination for those who work in the formal sector. However, there is also evidence of heterogeneity in the informal sector, since the profile of those who move to one of its segments —that of employers— is consistent with the idea of voluntariness.
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