Earnings Premiums and Penalties for Self-Employment and Informal Employees around the World
This paper examines the earnings premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employee...
| Main Authors: | , , |
|---|---|
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2016/01/25747773/earnings-premiums-penalties-self-employment-informal-employees-around-world http://hdl.handle.net/10986/23630 |
| Summary: | This paper examines the earnings
premiums associated with different types of employment in 73
countries. Workers are divided into four categories:
non-professional own-account workers, employers and
own-account professionals, informal wage employees, and
formal wage employees. Approximately half of the workers in
low-income countries are non-professional own-account
workers and the majority of the rest are informal employees.
Fewer than 10 percent are formal employees, and only 2
percent of workers in low-income countries are employers or
own-account professionals. As per capita gross domestic
product increases, there are large net shifts from
non-professional own-account work into formal wage
employment. Across all regions and income levels,
non-professional own-account workers and informal wage
employees face an earnings penalty compared with formal wage
employees. But in low-income countries this earnings penalty
is small, and non-professional own-account workers earn a
positive premium relative to all wage employees. Earnings
penalties for non-professional own-account workers tend to
increase with gross domestic product and are largest for
female workers in high-income countries. Men earn greater
premiums than women for being employers or own-account
professionals. These results are consistent with
compensating wage differentials and firm quasi-rents playing
important roles in explaining cross-country variation in
earnings penalties, and raise questions about the extent to
which the unskilled self-employed are rationed out of formal
wage work in low-income countries. |
|---|