Are informal workers secondary workers?: evidence for Argentina

Abstract

Empirical studies attempting at testing dualism in developing countries often rely on an ex-ante definition of the primary and the secondary sector. Many times this methodology causes biases in the estimation due to sample selection problems. Also, such definitions may be arbitrary sometimes. We use twenty seven years of Household Data in order to test for the existence dual labor markets in Argentina. We estimated an endogenous switching model with unknown regime without defining ex-ante sector attachment. We find evidence of dualism for both periods analyzed. However, the differences between the two sectors have significantly changed over time. Finally, our estimations also corroborate the fact that using the usual ex-ante definition of sector attachment may not be adequate for testing dualism.