Mobility, poverty and well-being among the informally employed in Bosnia and Herzegovina

We analyse informal-sector employment in Bosnia and Herzegovina (BH), using panel data from the Living Standards Measurement Studies. We derive four main conclusions. First, there is significant labour market mobility in BH, with education being an important factor in explaining movements from informal- to formal-sector jobs. Secondly, those in informal jobs are much more likely to suffer from poverty than formally employed people. Thirdly, earnings inequality is more pronounced in the informal sector than elsewhere. Fourthly, the informally employed report lower levels of life satisfaction compared with those in almost all other groups in the labour market. Overall, we conclude that, while the informal sector may represent a vital coping strategy for many, the formal sector provides much better prospects for prosperity and well-being.