Sectoral Selection and Informality: a Nicaraguan Case Study |
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| Authors: | Michael J Pisani José A Pagán |
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| Institution: | Department of Management, College of Business Administration, Central Michigan University, USA; Robert Wood Johnson Health &Society Scholars Program, University of Pennsylvania, Philadelphia, USA and Department of Economics &Finance, College of Business Administration, University of Texas—Pan American, Edinburg, USA |
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| Abstract: | Using microdata from the 1998 and 1993 Nicaraguan Living Standards Measurement Survey, this paper analyzes the relative size and attractiveness of formal and informal sector employment. Switching regression models of the formal/informal sector employment choice indicate that education across years and gender are the primary determinants of formal sector participation. Furthermore, the formal sector is characterized by positive selection. The results for the informal sector are less definitive, but are also suggestive of positive selection. These findings imply that the informal and formal sectors in Nicaragua contribute positively to the overall economy by attracting those individuals best suited for (in)formal sector employment. |
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