Working Paper: NBER ID: w20891
Authors: Brian McCaig; Nina Pavcnik
Abstract: We document several facts about workforce transitions from the informal to the formal sector in Vietnam, a fast growing, industrializing, and low-income country. First, younger workers, particularly migrants, are more likely to work in the formal sector and stay there permanently. Second, the decline in the aggregate share of informal employment occurs through changes between and within birth cohorts. Third, younger, educated, male, and urban workers are more likely to switch to the formal sector than other workers initially in the informal sector. Poorly educated, older, female, rural workers face little prospect of formalization. Fourth, formalization coincides with occupational upgrading.
Keywords: Informal Employment; Formal Sector; Vietnam; Labor Market; Migration
JEL Codes: F0; F16; J46; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| younger workers (J29) | formal employment (J46) |
| migrants (F22) | formal employment (J46) |
| birth cohorts (J11) | decline in informality (J46) |
| younger cohorts (J19) | decline in informality (J46) |
| better-educated workers (J24) | formal employment (J46) |
| male workers (J79) | formal employment (J46) |
| urban workers (R23) | formal employment (J46) |
| formalization (L23) | occupational upgrading (J62) |