Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine

64 Pages Posted: 23 May 2008

See all articles by Hartmut Lehmann

Hartmut Lehmann

University of Bologna - School of Economics, Management, and Statistics; IZA Institute of Labor Economics

Norberto Pignatti

Tbilisi State University (TSU) - International School of Economics (ISET); IZA Institute of Labor Economics

Abstract

Research on informal employment in transition countries has been very limited because of a lack of appropriate data. A new rich panel data set from Ukraine, the Ukrainian Longitudinal Monitoring Survey (ULMS), enables us to provide some empirical evidence on informal employment in Ukraine and the validity of the three schools of thought in the literature on the role of informality in the development process. Apart from providing additional evidence with richer data than usually available in developing countries, the paper investigates to what extent the informal sector plays a role in labor market adjustment in a transition economy. The evidence points to some labor market segmentation since the majority of informal salaried employees are involuntarily employed and workers seem to queue for formal salaried jobs. We also show that the dependent informal sector is segmented into a voluntary "upper tier" and an involuntary lower part where the majority of informal jobs are located. Our contention that informal self-employment is voluntary is confirmed by the substantial earnings premia associated with movements into this state.

Keywords: labor market segmentation, transition economies, Ukraine

JEL Classification: J31, J40, P23

Suggested Citation

Lehmann, Hartmut F. and Pignatti, Norberto, Informal Employment Relationships and Labor Market Segmentation in Transition Economies: Evidence from Ukraine. , Vol. , pp. -, . Available at SSRN: https://ssrn.com/abstract=1136431 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Hartmut F. Lehmann (Contact Author)

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Norberto Pignatti

Tbilisi State University (TSU) - International School of Economics (ISET) ( email )

16 Zandukeli Street
Tbilisi, 0108
Georgia

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
180
rank
164,333
Abstract Views
1,215
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information