The formal sector wage premium and firm size for self-employed workers

Olivier Bargain, Eliane El Badaoui, Prudence Kwenda, Eric Strobl () and Frank Walsh

No 201207, Working Papers from School of Economics, University College Dublin

Abstract: We develop a model where workers may enter self-employment or search for jobs as employees and where there is heterogeneity across workers’ managerial ability. Workers with higher skills will manage larger firms while workers with low managerial ability will run smaller firms and will be in self-employment only when they cannot find a salaried job. For these workers self-employment is a secondary/informal form of employment. The Burdett and Mortensen (1998) equilibrium search model is used for illustration as a special case of our more general framework. Empirical evidence from Mexico is provided and demonstrates that firm size wage effects for employees and self-employed workers are broadly consistent with the model.

Keywords: Self-employment; Managerial ability; Informal sector; Self-employed; Executive ability; Informal sector (Economics) (search for similar items in EconPapers)
JEL-codes: J31 O17 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-bec, nep-dge, nep-ent, nep-hrm, nep-iue, nep-lab and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://hdl.handle.net/10197/3719 First version, 2012 (application/pdf)

Related works:
Working Paper: The Formal Sector Wage Premium and Firm Size for Self-employed Workers (2013)
Working Paper: The Formal Sector Wage Premium and Firm Size for Self-employed Workers (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:201207

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