Migration as a Substitute for Informal Activities: Evidence from Tajikistan

24 Pages Posted: 31 Dec 2011

See all articles by Ilhom Abdulloev

Ilhom Abdulloev

IZA Institute of Labor Economics

Ira N. Gang

Rutgers University - Economics Department; IZA Institute of Labor Economics

John Landon-Lane

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics

Abstract

How is migration related to informal activities? They may be complementary since new migrants may have difficulty finding employment in formal work, so many of them end up informally employed. Alternatively, migration and informality may be substitutes since migrants' incomes in their new locations and income earned in the home informal economy (without migration) are an imperfect trade-off. Tajikistan possesses both a very large informal sector and extensive international emigration. Using the gap between household expenditure and income as an indicator of informal activity, we find negative significant correlations between informal activities and migration: the gap between expenditure and income falls in the presence of migration. Furthermore, Tajikistan's professional workers ability to engage in informal activities enables them to forgo migration, while low-skilled non-professionals without post-secondary education choose to migrate instead of working in the informal sector. Our empirical evidence suggests migration and informality substitute for one another.

Keywords: informal, migration, remittances, Tajikistan

JEL Classification: O17, J61, P23

Suggested Citation

Abdulloev, Ilhom and Gang, Ira N. and Landon-Lane, John, Migration as a Substitute for Informal Activities: Evidence from Tajikistan. IZA Discussion Paper No. 6236, Available at SSRN: https://ssrn.com/abstract=1977822

Ilhom Abdulloev (Contact Author)

IZA Institute of Labor Economics ( email )

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

Ira N. Gang

Rutgers University - Economics Department ( email )

75 Hamilton Street
ECONOMICS, New Jersey Hall, Rutgers University
New Brunswick, NJ 08901-1248
United States
732-932-7363 (Phone)
732-932-7416 (Fax)

HOME PAGE: http://econweb.rutgers.edu/gang/research

IZA Institute of Labor Economics ( email )

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

John Landon-Lane

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

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