What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh

95 Pages Posted: 14 Jan 2020 Last revised: 15 Jan 2020

See all articles by Minhaj Mahmud

Minhaj Mahmud

Bangladesh Institute of Development Studies (BIDS)

Italo A. Gutierrez

Independent Consultant

Krishna Kumar

RAND Corporation - Labor and Population

Shanthi Nataraj

RAND Corporation

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Date Written: January 13, 2020

Abstract

This study uses a choice experiment among 2,000 workers in Bangladesh to elicit willingness to pay (WTP) for job attributes: a contract, termination notice, working hours, paid leave, and a pension fund. Using a stated preference method allows calculation of WTP for benefits in this setting, despite the lack of data on worker transitions, and the fact that many workers are self-employed, which makes it difficult to use revealed preference methods. Workers highly value job stability: the average worker would be willing to forego a 27 percent increase in income to obtain a 1-year contract (relative to no contract), or to forego a 12 percent increase to obtain thirty days of termination notice. There is substantial heterogeneity in WTP by type of employment and gender: women value shorter working hours more than men, while government workers place a higher value on contracts than do private sector employees.

Keywords: Labor Markets, Labor Standards, Rural Labor Markets, Educational Sciences, Employment and Unemployment, Gender and Development

Suggested Citation

Mahmud, Minhaj and Gutierrez, Italo A. and Kumar, Krishna and Nataraj, Shanthi, What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh (January 13, 2020). World Bank Policy Research Working Paper No. 9108, Available at SSRN: https://ssrn.com/abstract=3518869

Minhaj Mahmud (Contact Author)

Bangladesh Institute of Development Studies (BIDS) ( email )

E-17, Agargao, Shere Bangla Nagar
Dhaka, 1207
Bangladesh

Italo A. Gutierrez

Independent Consultant ( email )

Krishna Kumar

RAND Corporation - Labor and Population ( email )

United States

Shanthi Nataraj

RAND Corporation ( email )

1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
United States
310-393-0411 (Phone)

HOME PAGE: http://www.rand.org/

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