Subjective poverty and working in the (in)formal sector: An empirical analysis in transition

Type Working Paper
Title Subjective poverty and working in the (in)formal sector: An empirical analysis in transition
Author(s)
Publication (Day/Month/Year) 2004
URL http://www.tinbergen.nl/files/papers/Ferrer-i-Carbonell.pdf
Abstract
This paper offers a first systematic analysis of the effect of working in the (in)formal sector on subjective poverty. For this purpose, an econometric analysis of a unique dataset for a transition country, to wit, Albania is performed. For most individuals, working in the informal sector is negatively correlated with their financial satisfaction, i.e., their feelings of economic poverty. This negative correlation comes on top of a differential income effect. The paper shows that the negative effect is explained by individuals’ tax morale, as captured here by individuals’ perceived financial uncertainty in the future of not paying taxes today.

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