Is there an informal employment wage premium? Evidence from Tajikistan

IZA Journal of Labor & Development

Table 7 Decomposition of formal-informal wage differential correcting for endogeneity, Tajikistan 2007

Percentiles	Endogeneity corrected differential	Gap due to unobservable	Gap due to observables
10th	-0.927	-0.537	-0.390
	(0.034)	(0.025)	(0.028)
20th	-0.689	-0.868	0.179
	(0.029)	(0.027)	(0.027)
30th	-0.665	-0.970	0.304
	(0.033)	(0.019)	(0.026)
40th	-0.667	-0.892	0.225
	(0.027)	(0.019)	(0.019)
50th	-0.546	-0.897	0.351
	(0.024)	(0.035)	(0.035)
60th	-0.392	-1.335	0.942
	(0.025)	(0.027)	(0.026)
70th	-0.262	-1.625	1.363
	(0.025)	(0.024)	(0.023)
80th	-0.095	-1.116	1.021
	(0.030)	(0.060)	(0.058)
90th	0.112	-0.407	0.519
	(0.040)	(0.047)	(0.039)

Notes: Machado and Mata Oaxaca-Ransom decomposition correcting for endogenous sector choice. The bootstrapped standard errors in parenthesis. Bootstrap estimates are based on 800 replications. The differential is calculated by every 5th percentile. The main percentile levels are presented. The specification controls for total number years of education, potential experience, marital status, job tenure, Tajik ethnicity, dummies for female, being in a private sector, rural settlement and occupational dummies.