Comparative Analysis of Labor Market Dynamics Using Markov Processes: An Application to Informality

By Mariano Bosch, William F. Maloney. Social Science Research Network, 2007

296 citations recorded by the source corpus.

This paper discusses a set of statistics for examining and comparing labor market dynamics based on the estimation of continuous time Markov transition processes. It then uses these to establish stylized facts about dynamic patterns of movement using panel data from Argentina, Brazil and Mexico. The estimates suggest broad commonalities among the three countries, and establish numerous common patterns of worker mobility among sectors of work and inactivity. As such, we offer some of the first comparative work on labor dynamics. The paper then particularly focuses on the role of the informal sector, both for its intrinsic interest, and as a case study illustrating the strengths and limits of the tools. The results suggest that a substantial part of the informal sector, particularly the self-employed, corresponds to voluntary entry although informal salaried work may correspond more closely to the standard queuing view, especially for younger workers.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/d41a69133bf24284193585dd0f70581dcbed946f

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Citations in the corpus

Informality: Causes and Consequences for Development (2020, background): “A well-established stylised fact is that informal employment (like unemployment) is counter-cyclical, expanding during contractions and decreasing during booms as a fraction of employment (Loayza 1996, Perry et al. 2007, Bosch & Maloney 2010, Bosch & Esteban-Pretel 2012).”
Enforcement of Labor Regulation and Informality (2011, background): “One view is to consider informal wage earners as working (mainly) in a segmented sector, as in a very standard model of the informal sector, and informal self-employed as being mobile between the formal and informal sectors of the economy (e.g., Bosch and Maloney, 2010).”
Self-Employment in the Developing World (2012, background): “This consensus was challenged by a series of studies of job mobility from Mexico and Brazil, which found high rates of mobility into self-employed jobs as well as several self-employed who report moving by choice (Bosch & Maloney, 2010; Maloney, 2004).”
Who are the Microenterprise Owners? Evidence from Sri Lanka on Tokman v. De Soto (2008, unknown): “To these wage workers we administered a survey gathering information on their current jobs, labor history, family background, and attitudes.”