Income and Bargaining Effects on Education and Health
This Paper Measures the Degree of Segmentation in the Brazilian Labor Market the WageDifferential Between Formal and Informal Workers With Data From the Monthly EmploymentSurvey (Pme), a Rotating Panel of Households in Six Metropolitan Regions. Controlling ForObservable and Unobservable Characteristics, We Find That Workers Earn More in the Formal Sector,Which Supports the Segmentation Hypothesis. Contrary to Other Studies That Rely on Two-StepProcedures to Correct For Self-Selection Bias or Repeated Cross-Sections to Account For Fixed Effects,Our True Panel Allows Us, Under Certain Conditions, to Solve Both Problems Simultaneously,Providing a Better Estimate of the Wage Differential. We Also Break Down the Degree OfSegmentation By Age, Gender, Position in the Household and Other Socio-Economic Attributes ToIdentify the Groups Where This Phenomenon is More Prevalent. Finally, We Investigate TheRobustness of Our Findings to the Inclusion of Self-Employed Individuals, and Also Apply a TwostagePanel Probit Model Using the Self-Selection Correction Strategy in Botelho and Ponczek(2006) to Investigate a Potential Weakness of the Fixed-Effects Estimator.
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