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Wage Differentials and Mobility in the Urban Labor Market: A Panel Data Analysis for Mexico
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In this paper, a dynamic random effects panel data model was developed to analyze wage differentials mobility between the formal and informal sector in urban Mexico, using panel data on five quarters drawn from Mexico's Urban Employment Survey.Abstract:
We analyze wage differentials mobility between the formal and informal sector in urban Mexico, using panel data on five quarters drawn from Mexico's Urban Employment Survey. We develop a dynamic random effects panel data model. It consists of two separate wage equations for the two sectors and a multinomial logit part explaining the labor market state, in which wages are included as explanatory variables. The model is estimated using simulated maximum likelihood. The estimates show that wage differentials increase with education level. The probability of formal sector employment strongly increases with the wage differential. Simulated transition probabilities show that for male workers, the choice between formal and informal sector is driven by wage differentials and unobserved heterogeneity, while true state dependence is much less important. For women, nonparticipation is the most common labor market state, and true state dependence plays a much larger role.read more
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References
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Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-Selection in the Labor Market
TL;DR: In this article, an empirical equilibrium model of self-selection in the labor market that recognizes the existence of measured and unmeasured heterogeneous skills is presented, where the authors derive a model of the sectoral allocation of workers of different demographic types and present a new econometric procedure for combining micro and macro data to estimate supply and demand functions for unmeasure sectorspecific productive attributes.
Book
Informal economic activity
TL;DR: In this paper, the authors define the household sector as women's wages - unpaid household work and the national income accounts subsistence economics - the household in developing countries, and the criminal sector: organized crime in developed countries crime in the developing countries.