Working Paper

Are labor markets segmented in Argentina? a semiparametric approach

Abstract: We use data from Argentina?s household survey to evaluate the hypothesis that informal workers would expect higher wages in the formal sector. Using various definitions of informal employment we find that, on average, formal wages are higher than informal wages. Parametric tests suggest that a formal premium remains after controlling for individual and establishment characteristics. However, this approach suffers from several econometric problems, which we address with semiparametric methods. The resulting formal premium estimates prove either small and insignificant, or negative. Neither do we find significant differences in measures of job satisfaction between the two sectors. In other words, the hypothesis that Argentina?s labor markets are competitive cannot be rejected.

Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2003-01-13

Number: 0110

Note: Published as: Pratap, Sangeeta and Erwan Quintin (2006), "Are Labor Markets Segmented in developing countries? A Semiparametric Approach," European Economic Review 50 (7): 1817-1841.