IDEAS home Printed from https://ideas.repec.org/a/bpj/bejmac/v21y2021i2p399-423n3.html
   My bibliography  Save this article

Occupational Choice and Investments in Human Capital in Informal Economies

Author

Listed:
  • Berniell Lucila

    (CAF, Research Department, Buenos Aires, Argentina)

Abstract

Informality is pervasive in many developing countries and it can affect occupational and educational decisions. Cross-country data shows that the rate of entrepreneurship as well as the gap between the skill premium for entrepreneurs and for workers increase with the size of the informal economy. Also, in countries with larger informal sectors the fraction of high-skilled individuals that choose to be entrepreneurs is larger. To explain these facts, I develop a model economy with human capital investments, occupational choice and an informal sector, in which the investment in human capital improves the efficiency of labor as well as managerial skills, and the technology to produce goods exhibits capital-skill complementarity. Model predictions can account for cross-country evidence and also shed light on the mechanisms at work when the level of informality in the economy increases. In particular, a higher level of informality discourages human capital investments for workers while it incentivizes these investments for the case of some managers, mostly informal but talented.

Suggested Citation

  • Berniell Lucila, 2021. "Occupational Choice and Investments in Human Capital in Informal Economies," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(2), pages 399-423, June.
  • Handle: RePEc:bpj:bejmac:v:21:y:2021:i:2:p:399-423:n:3
    DOI: 10.1515/bejm-2020-0024
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejm-2020-0024
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    File URL: https://libkey.io/10.1515/bejm-2020-0024?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Temitope Sade AKINTUNDE & Abiodun Samuel ISAYOMI, 2023. "The Effect Of Informal Economy On Human Capital Development," Business & Management Compass, University of Economics Varna, issue 3, pages 182-195.
    2. Monserrat Serio & Pablo Mahnic, 2022. "Exploring the U-shaped relationship between education and entrepreneurial choice: a theoretical model and empirical findings for Latin America," SN Business & Economics, Springer, vol. 2(6), pages 1-22, June.
    3. Pablo Mahnic, 2021. "Emprendedurismo, capital humano y crecimiento económico," Asociación Argentina de Economía Política: Working Papers 4488, Asociación Argentina de Economía Política.

    More about this item

    Keywords

    entrepreneurship; human capital; informality; occupational choice;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejmac:v:21:y:2021:i:2:p:399-423:n:3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.