DISCUSSION

repec.nep.lma

n?u=RePEc:iza:izadps:dp10389&r=lma

and Leighton 1990). Women are also more likely to be informal while balancing child rearing or

facing exclusion from certain occupations (see Chen et al. 2006). Similarly, institutional

arrangements governing labor markets, or differences in the state’s enforcement capacity may

influence the costs and benefits of informal employment. For example, decreases in labor benefits

or increases in barriers to registration can encourage informal employment (Galiani and

Weinschelbaum 2012; Saavedra and Chong 1999). Additionally, socio-economic factors including

language (Chiswick et al. 2013), migration (Piracha et al. 2013; Calvó-Armengol and Jackson

2004), health and cultural preferences (Adams and Valdivia 1994) may also influence employment

outcomes.

Figure 1 Conceptual framework: Factors shaping Access to Formal Markets

Education

Ethnicity

Pensions

Demographics

Institutions

Socio-Economic

Formal

Employment

Poverty Resilience

Higher Earnings

We control for several variables proxying for each channel and implement age and district

fixed effects to control for time-specific and space-specific variations. Still, unobservable

characteristics and measurement errors are more difficult to address with available data. To address

5

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