Title: The formal sector wage premium and firm size
Description: "We show theoretically that when larger firms pay higher wages and are more likely to be caught defaulting on labour taxes, then large high-wage firms will be in the formal sector and small low-wage firms will be in the informal sector. The formal sector wage premium is thus just a firm size wage differential. Using data from the South African labour force survey we illustrate that firm size is indeed the key variable determining whether a formal sector premium exists"--Forschungsinstitut zur Zukunft der Arbeit web site.
Subjects: Wages, Informal sector (Economics), Industries, Size of
Places: South Africa