Publication: What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh
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Date
2020-01
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Published
2020-01
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Abstract
This study uses a choice experiment among 2,000 workers in Bangladesh to elicit willingness to pay (WTP) for job attributes: a contract, termination notice, working hours, paid leave, and a pension fund. Using a stated preference method allows calculation of WTP for benefits in this setting, despite the lack of data on worker transitions, and the fact that many workers are self-employed, which makes it difficult to use revealed preference methods. Workers highly value job stability: the average worker would be willing to forego a 27 percent increase in income to obtain a 1-year contract (relative to no contract), or to forego a 12 percent increase to obtain thirty days of termination notice. There is substantial heterogeneity in WTP by type of employment and gender: women value shorter working hours more than men, while government workers place a higher value on contracts than do private sector employees.
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“Mahmud, Minhaj; Gutierrez, Italo A.; Kumar, Krishna B.; Nataraj, Shanthi. 2020. What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh. Policy Research Working Paper;No. 9108. © World Bank. http://hdl.handle.net/10986/33192 License: CC BY 3.0 IGO.”
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