ARC Centre of Excellence in Population Ageing

Extracting the data on the informal sector Since the VHLSS does not survey the informal sector, we extracted the microdata relating to informal workers following the informality definition from the International Labour Organization (ILO, 2013). [...] This means the informality network was calculated as the proportion of workers in the informal sector to the population in the commune-level (district) units. [...] The higher or lower proportion of informal employment in the district would affect the opportunities to join the informal sectors based on the features and characteristics of the area’s labour market. [...] We generated two variables as a proxy for the commune’s characteristics, namely “distance from the commune to the market” and “distance from the commune to the city centre”, and examined whether the correlation between the informal network and these variables affect household consumption and welfare. [...] As shown in Table C.1 (Appendix C), the results from the OLS and IV models with the informality network as the IV indicate the positive impacts of the choice of working in the formal sector on household consumption and welfare.