IDEAS home Printed from https://ideas.repec.org/a/kap/sbusec/v53y2019i4d10.1007_s11187-018-0102-9.html
   My bibliography  Save this article

Informality and poverty in Ecuador

Author

Listed:
  • Carla Canelas

    (Université Paris 1
    American University of Paris)

Abstract

This paper uses national representative data from the Ecuadorian Family Expenditure survey to study the determinants of poverty and informality in the country, taking into account the two-way relationship between these two phenomena. The main contribution of this paper is to present new empirical evidence on this relationship for a developing country where more than 60% of workers are in the informal sector. The results support the view of a heterogeneous informal market, in which informal work is both a demand-led phenomenon and a voluntary and primarily supply-led form of employment.

Suggested Citation

  • Carla Canelas, 2019. "Informality and poverty in Ecuador," Small Business Economics, Springer, vol. 53(4), pages 1097-1115, December.
    • Handle: RePEc:kap:sbusec:v:53:y:2019:i:4:d:10.1007_s11187-018-0102-9
    DOI: 10.1007/s11187-018-0102-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11187-018-0102-9
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11187-018-0102-9?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 search for a different version of it.

    References listed on IDEAS

    as
    1. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Ecuador country study," WIDER Working Paper Series wp-2015-076, World Institute for Development Economic Research (UNU-WIDER).
    2. Juan Pablo Atal & Hugo Nopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," Research Department Publications 4640, Inter-American Development Bank, Research Department.
    3. Carla Canelas & Silvia Salazar, 2014. "Gender and ethnic inequalities in LAC countries," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-15, December.
    4. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Cross-country analysis," WIDER Working Paper Series wp-2015-110, World Institute for Development Economic Research (UNU-WIDER).
    5. Carla Canelas & Silvia Salazar, 2014. "Gender and Ethnic Inequalities in LAC Countries," Post-Print halshs-00973891, HAL.
    6. Juan Pablo Atal & Hugo Nopo & Natalia Winder, 2009. "New Century, Old Disparities: Gender and Ethnic Wage Gaps in Latin America," Research Department Publications 4640, Inter-American Development Bank, Research Department.
    7. Amuedo-Dorantes, Catalina, 2004. "Determinants and Poverty Implications of Informal Sector Work in Chile," Economic Development and Cultural Change, University of Chicago Press, vol. 52(2), pages 347-368, January.
    8. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00820783, HAL.
    9. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Post-Print halshs-00820783, HAL.
    10. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 2-16, January.
    11. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Honduras country study," WIDER Working Paper Series wp-2015-078, World Institute for Development Economic Research (UNU-WIDER).
    12. Hanan Nazier & Racha Ramadan, 2015. "Informality and Poverty: A Causality Dilemma with Application to Egypt," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 5(4), pages 1-4.
    13. Carla Canelas, 2014. "Minimum Wage and Informality in Ecuador," WIDER Working Paper Series wp-2014-006, World Institute for Development Economic Research (UNU-WIDER).
    14. Webster, Chris & Wu, Fulong & Zhang, Fangzhu & Sarkar, Chinmoy, 2016. "Informality, property rights, and poverty in China’s “favelas”," World Development, Elsevier, vol. 78(C), pages 461-476.
    15. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-959, July.
    16. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Revue d'économie politique, Dalloz, vol. 123(4), pages 623-639.
    17. Mr. Luis Ignacio Jácome, 2004. "The Late 1990's Financial Crisis in Ecuador: Institutional Weaknesses, Fiscal Rigidities, and Financial Dollarization At Work," IMF Working Papers 2004/012, International Monetary Fund.
    18. Roxana Maurizio, 2012. "Labour informality in Latin America: the case of Argentina, Chile, Brazil and Peru," Global Development Institute Working Paper Series 16512, GDI, The University of Manchester.
    19. World Bank, 2013. "World Development Report 2014 [Informe sobre el desarrollo mundial 2014, Riesgo y oportunidad : la administración del riesgo como instrumento de desarrollo - Panorama general]," World Bank Publications - Books, The World Bank Group, number 16092.
    20. repec:unu:wpaper:wp2014-006 is not listed on IDEAS
    21. Günther, Isabel & Launov, Andrey, 2012. "Informal employment in developing countries," Journal of Development Economics, Elsevier, vol. 97(1), pages 88-98.
    22. Mallar, Charles D, 1977. "The Estimation of Simultaneous Probability Models," Econometrica, Econometric Society, vol. 45(7), pages 1717-1722, October.
    23. Gasparini Leonardo & Leonardo Tornaroli, 2009. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, September.
    24. Carla Canelas & Silvia Salazar, 2014. "Gender and Ethnic Inequalities in LAC Countries," Documents de travail du Centre d'Economie de la Sorbonne 14021r, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Jul 2014.
    25. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Venezuela country study," WIDER Working Paper Series wp-2015-084, World Institute for Development Economic Research (UNU-WIDER).
    26. Fields, Gary S., 1975. "Rural-urban migration, urban unemployment and underemployment, and job-search activity in LDCs," Journal of Development Economics, Elsevier, vol. 2(2), pages 165-187, June.
    27. World Bank, 2012. "Ecuador : The Faces of Informality (Las Caras de La Informalidad) [Ecuador - Las caras de la informalidad]," World Bank Publications - Reports 13252, The World Bank Group.
    28. Angrist, Joshua D, 2001. "Estimations of Limited Dependent Variable Models with Dummy Endogenous Regressors: Simple Strategies for Empirical Practice: Reply," Journal of Business & Economic Statistics, American Statistical Association, vol. 19(1), pages 27-28, January.
    29. Francesco Devicienti & Fernando Groisman & Ambra Poggi, 2009. "Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina," Working Papers 146, ECINEQ, Society for the Study of Economic Inequality.
    30. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-142, March.
    31. Aguilar, Alexandra Cortés & García Muñoz, Teresa M. & Moro-Egido, Ana I., 2013. "Heterogeneous self-employment and satisfaction in Latin America," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 44-61.
    32. Rawaa Harati, 2013. "Heterogeneity in the Egyptian informal labour market: choice or obligation?," Documents de travail du Centre d'Economie de la Sorbonne 13032, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    33. Sarbajit Chaudhuri & Ujjaini Mukhopadhyay, 2010. "Revisiting the Informal Sector," Springer Books, Springer, number 978-1-4419-1194-0, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Lippe, Rattiya Suddeephong & Ojeda Luna, Tatiana & Katajamäki, Waltteri & Schweinle, Jörg, 2023. "Labour informality in forestry: A longitudinal (2009–2020) cross-country analysis of determinants in 70 developing countries," Forest Policy and Economics, Elsevier, vol. 156(C).
    2. Susana HERRERO-OLARTE & Mateo LOAIZA, 2021. "Structural Or Conjunctural Changes To Reduce Poverty In Ecuador?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 21(2), pages 19-36.
    3. Thi Hong Hanh Pham, 2022. "Shadow Economy and Poverty: What Causes What?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(4), pages 861-891, December.
    4. Nuria Ceular-Villamandos & Virginia Navajas-Romero & Lorena Caridad y López del Río & Lucia Zita Zambrano-Santos, 2021. "Workplace Situation and Well-Being of Ecuadorian Self-Employed," Sustainability, MDPI, vol. 13(4), pages 1-26, February.
    5. H. Nicolás Acosta-González & Oscar D. Marcenaro-Gutiérrez, 2024. "Bad Jobs Versus Good Jobs: Does It Matter for Life and Job Satisfaction?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7647-7671, June.
    6. José Ventura & Kety Jauregui, 2023. "Poverty Reduction through Corporate Social Responsibility: Case Study of Peruvian Rural Families," Sustainability, MDPI, vol. 15(2), pages 1-20, January.
    7. Segun Thompson Bolarinwa & Munacinga Simatele, 2023. "Informality and poverty in Africa: Which comes first?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1581-1592, June.
    8. Davidescu, Adriana AnaMaria & Petcu, Monica Aureliana & Curea, Stefania Cristina & Manta, Eduard Mihai, 2022. "Two faces of the same coin: Exploring the multilateral perspective of informality in relation to Sustainable Development Goals based on bibliometric analysis," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 683-705.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carla Canelas, 2015. "Poverty and informality in Ecuador," WIDER Working Paper Series 112, World Institute for Development Economic Research (UNU-WIDER).
    2. Carla Canelas, 2015. "Poverty and informality in Ecuador," WIDER Working Paper Series wp-2015-112, World Institute for Development Economic Research (UNU-WIDER).
    3. Mónica Jiménez, 2017. "La calidad del empleo y sus consecuencias para el mercado de trabajo de las medianas y grandes empresas y del sector público de argentina," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 40(79), pages 133-180.
    4. Hanan Nazier & Racha Ramadan, 2015. "Informality and Poverty: A Causality Dilemma with Application to Egypt," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 5(4), pages 1-4.
    5. Gustavo Canavire-Bacarreza & Luis C. Carvajal-Osorio, 2020. "Two Stories of Wage Dynamics in Latin America: Different Policies, Different Outcomes," Journal of Labor Research, Springer, vol. 41(1), pages 128-168, June.
    6. Guillermo Cruces & Gary S. Fields & David Jaume & Mariana Viollaz, 2015. "The growth-employment-poverty nexus in Latin America in the 2000s: Cross-country analysis," WIDER Working Paper Series wp-2015-110, World Institute for Development Economic Research (UNU-WIDER).
    7. Edward Sennoga & Lacina Balma, 2022. "Fiscal sustainability in Africa: Accelerating the post‐COVID‐19 recovery through improved public finances," African Development Review, African Development Bank, vol. 34(S1), pages 8-33, July.
    8. Carla Canelas & Rachel M. Gisselquist, 2017. "Human capital, labour market outcomes, and horizontal inequality in Guatemala," WIDER Working Paper Series 091, World Institute for Development Economic Research (UNU-WIDER).
    9. Carla Canelas & Rachel M. Gisselquist, 2018. "Human capital, labour market outcomes, and horizontal inequality in Guatemala," Oxford Development Studies, Taylor & Francis Journals, vol. 46(3), pages 378-397, July.
    10. Floridi, A. & Wagner, N. & Cameron, J., 2016. "A study of Egyptian and Palestine trans-formal firms – A neglected category operating in the borderland between formality and informality," ISS Working Papers - General Series 619, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    11. Kasturi Sadhu & Saumya Chakrabarti, 2021. "Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(4), pages 694-724, December.
    12. Erik Jonasson, 2011. "Informal Employment and the Role of Regional Governance," Review of Development Economics, Wiley Blackwell, vol. 15(3), pages 429-441, August.
    13. Mariapia Mendola, 2004. "Migration and Technological Change in Rural Households: Complements or Substitutes?," Development Working Papers 195, Centro Studi Luca d'Agliano, University of Milano.
    14. Paula Herrera-Id�rraga & Enrique L�pez-Bazo & Elisabet Motell�n, 2015. "Double Penalty in Returns to Education: Informality and Educational Mismatch in the Colombian Labour Market," Journal of Development Studies, Taylor & Francis Journals, vol. 51(12), pages 1683-1701, December.
    15. Altantsetseg Batchuluun, 2021. "The gender wage gap in Mongolia: Sectoral segregation as a driving factor," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1437-1465, August.
    16. Nicola Pontarollo & Mercy Orellana & Joselin Segovia, 2020. "The Determinants of Subjective Well-Being in a Developing Country: The Ecuadorian Case," Journal of Happiness Studies, Springer, vol. 21(8), pages 3007-3035, December.
    17. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality, in: Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154, Emerald Group Publishing Limited.
    18. Victoria Costoya & Lucía Echeverría & María Edo & Ana Rocha & Agustina Thailinger, 2022. "Gender Gaps within Couples: Evidence of Time Re-allocations during COVID-19 in Argentina," Journal of Family and Economic Issues, Springer, vol. 43(2), pages 213-226, June.
    19. Maier, Michael F. & Sprietsma, Maresa, 2016. "Does it pay to move? Returns to regional mobility at the start of the career for tertiary education graduates," ZEW Discussion Papers 16-060, ZEW - Leibniz Centre for European Economic Research.
    20. Norman V. Loayza, 2016. "Informality in the Process of Development and Growth," The World Economy, Wiley Blackwell, vol. 39(12), pages 1856-1916, December.

    More about this item

    Keywords

    Informality; Self-employment; Poverty; Developing economy; Ecuador;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

    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:kap:sbusec:v:53:y:2019:i:4:d:10.1007_s11187-018-0102-9. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.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.