TY  - RPRT
        AU  - Akay, Alpaslan
AU  - Khamis, Melanie
        TI  - The Persistence of Informality: Evidence from Panel Data
        PY  - 2011/Nov/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 6163
        UR  - https://www.iza.org/index.php/publications/dp6163
        AB  - Informality is a growing phenomenon in the developing and transition country labor market context. In particular, it is noticeable that working in an informal employment relationship is often not temporary. The degree of persistence of informality in the labor market might be due to different sources: structural state dependence due to past informality experiences and spurious state dependence due to time-invariant unobserved individual effects, which can alter the propensity of being in the informal sector independently from actual informality experiences. The purpose of our paper is to study the dynamics of informality using a genuine panel data set in the Ukrainian labor market. By estimating a dynamic panel data probit model with endogenous initial conditions, we find a highly significant degree of persistence due to previous informality experiences. This result implies that policies attempting to reduce current levels of informality may have a long-lasting effect on the labor market.
        KW  - transition countries
KW  - unobserved heterogeneity
KW  - state dependence
KW  - informality
        ER  -