The Formal Sector Wage Premium and Firm Size - Archive ouverte HAL
Article Dans Une Revue Journal of Development Economics Année : 2010

The Formal Sector Wage Premium and Firm Size

Eliane El Badaoui
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Eric Strobl
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Frank Walsh
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Résumé

We show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labor taxes, then large-high wage firms will be in the formal and small-low wage firms will be in the informal sector. The formal sector wage premium is thus just a firm size wage differential. Using data from Ecuador we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists.

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Dates et versions

hal-02124906 , version 1 (10-05-2019)

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  • HAL Id : hal-02124906 , version 1

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Eliane El Badaoui, Eric Strobl, Frank Walsh. The Formal Sector Wage Premium and Firm Size. Journal of Development Economics, 2010, 91, pp.37-47. ⟨hal-02124906⟩
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