Resource title

The effect of unobservables on labour supply decisions: the formal and informal sector during transition

Resource image

image for OpenScout resource :: The effect of unobservables on labour supply decisions: the formal and informal sector during transition

Resource description

The transition from a command economy in the FSU resulted in increased activities in the informal sector. However despite prevalent delays in wage payments many workers were still observed to be working full-time in the formal sector. Here a model of workers' labour supply decisions incorporates unobservable features of informal activities in both sectors; namely unofficial payments within the formal sector and stigma associated with the informal sector. These extensions result in non-trivial changes to workers' reservation wage conditions and reconcile the unexpected outcomes of workers' labour supply decisions. A limited empirical analysis of Kyrgyz data, for 1993 and 1996, provides support for the implications of this framework.

Resource author

Resource publisher

Resource publish date

Resource language

en

Resource content type

application/pdf

Resource resource URL

http://eprints.lse.ac.uk/6329/1/The_Effect_of_Unobservables_on_Labour_Supply_Decisions_The_formal_and_informal_sector_during_transition.pdf

Resource license