Library Header Image
LSE Research Online LSE Library Services

The effect of unobservables on labour supply decisions: the formal and informal sector during transition

Namazie, Ceema Zahra (2003) The effect of unobservables on labour supply decisions: the formal and informal sector during transition. CASEpaper (72). Centre for Analysis of Social Exclusion, London School of Economics and Political Science, London, UK.

Download (317kB) | Preview


The transition from a command economy in the FSU resulted in increased activities in the informal sector. However despite prevalent delays in wage payments many workers were still observed to be working full-time in the formal sector. Here a model of workers' labour supply decisions incorporates unobservable features of informal activities in both sectors; namely unofficial payments within the formal sector and stigma associated with the informal sector. These extensions result in non-trivial changes to workers' reservation wage conditions and reconcile the unexpected outcomes of workers' labour supply decisions. A limited empirical analysis of Kyrgyz data, for 1993 and 1996, provides support for the implications of this framework.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2003 Ceema Zahra Namazie
Divisions: Centre for Analysis of Social Exclusion
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P23 - Factor and Product Markets; Industry Studies; Population
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply
Date Deposited: 02 Jul 2008 10:41
Last Modified: 09 Dec 2020 02:47

Actions (login required)

View Item View Item


Downloads per month over past year

View more statistics