Formal vs. Informal Work: Two Very Different Earnings Lives
15 June 2024 · 1 min read
Using panel data from Indonesia and Vietnam, where most workers are informal, the shape of a working life looks strikingly different across sectors.
Earnings profiles in both sectors are concave — they rise, flatten, and fall — mirroring richer economies. But growth is lower, transitions between sectors are rare, and a persistent formal-sector wage premium remains.
This matters for how we think about mobility, risk, and the returns to education.
#labor economics#informality#inequality
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