@TechReport{iza:izadps:dp16225, author={Flabbi, Luca and Tejada, Mauricio}, title={Are Informal Self-Employment and Informal Employment as Employee Behaviorally Distinct Labor Force States?}, year={2023}, month={Jun}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={16225}, url={https://www.iza.org/publications/dp16225}, abstract={The paper performs both a parametric and non-parametric analysis to address a fundamental question in the growing literature using search models to study labor market informality: should informal self-employment and informal employment as employee be considered two different labor market states? Both the non-parametric and the parametric tests strongly reject equality between the two states, cautioning against aggregating them in a common "informality state." The parametric model indicates the source of the difference in the high dispersion of informal self-employment income and in the low duration of informal employee jobs. }, keywords={labor market frictions;search and matching;informality;self-employment}, }