The informal employment literature suggest the coexistence of involuntary and voluntary informal employment within the informal labor force. Empirically, only a few studies have attempted the identification of such segments while assuming a Roy model framework of wage maximization. We fill this gap by introducing a Gronau model framework where individuals maximize an inner utility that depends on consumption and time allocated to home activities. The econometric model is a bivariate finite mixture model that we apply over a sample of the Peruvian labor force. We find evidence in favor of the coexistence view, where most, yet not all, of informal employment is involuntary. Keywords: Finite mixture, Informal employment, labor segmentation, Peru. Preprint
Project leader: Jorge Davalos
No journal publications.
No working papers.
No policy briefs.
No final reports.
Copyright © 2008-2022 PEP. All rights reserved.
If you have any question or if you need assistance, please contact: email@example.com.