This paper investigates returns to capital in the formal and informal sectors in Ethiopia using parametric and semi-parametric regression techniques. Results show that there is a higher annual median return to capital in the informal sector (52–140%) than the formal sector (15–21%). However,...

This study focuses on innovation in a cluster of informal shoemaking firms in Ethiopia—namely the Mercato footwear cluster. It examines how differently those firms are embedded in networks and how heterogeneous they are in absorptive capacity, and how this heterogeneity affects their...

Employing a unique dataset that covers households from six West African capitals, this paper provides new evidence on the demand for informal sector products and services. We first investigate whether demand linkages exist between formal and informal products and distribution channels. In a...

Comparing emigration rates of countries at different stages of economic development, an inverse u-shape emerges. Since the “migration hump” peaks at an average income of 6000 to 10 000 USD, economic progress in developing countries is often assumed to increase migration consistently....

We exploit panel data and large, abrupt, and unusual dislocations of Indonesian workers in the wake of the Asian Financial Crisis to investigate the robustness and persistence of inter-industry wage differentials (IWDs). Unobserved worker characteristics explain 36% of IWDs. IWDs persist through...

Mexico’s college premium rose in the 1990s. Studies employing structural decomposition analyses treat the college premium as the relative price of “skilled” to “unskilled” workers. They find that reallocations of labor across industries and occupations cannot account for rising college...

This paper examines the effect of parental disability on the education of children in Vietnam. Having a disabled parent reduces a child’s probability of attending school by 16%, and lowers the expected number of grades completed. The negative impact on school outcomes is larger for boys, but...

We analyze the effect of income inequality on terrorism for a sample of 113 countries between 1984 and 2012. We provide evidence, robust to various methodological changes (e.g., the use of instrumental-variable approaches), that higher levels of income inequality are associated with more...

Conventional wisdom says corruption is bad for income inequality. But recent research on Latin America finds a trade-off between corruption and inequality and suggests this is due to the large informal sector in the region. Using data on a large sample of countries we find that the informal...

The linkage between the formal and informal credit markets in developing countries has largely been unexplored. This paper addresses one important aspect of the linkage by empirically investigating the impact of the intervention of microfinance programs on the moneylender interest rates in...