Mossaad, NadwaGindling, T. H.Newhouse, David2016-01-122016-01-122016-01https://hdl.handle.net/10986/23630This paper examines the earnings premiums associated with different types of employment in 73 countries. Workers are divided into four categories: non-professional own-account workers, employers and own-account professionals, informal wage employees, and formal wage employees. Approximately half of the workers in low-income countries are non-professional own-account workers and the majority of the rest are informal employees. Fewer than 10 percent are formal employees, and only 2 percent of workers in low-income countries are employers or own-account professionals. As per capita gross domestic product increases, there are large net shifts from non-professional own-account work into formal wage employment. Across all regions and income levels, non-professional own-account workers and informal wage employees face an earnings penalty compared with formal wage employees. But in low-income countries this earnings penalty is small, and non-professional own-account workers earn a positive premium relative to all wage employees. Earnings penalties for non-professional own-account workers tend to increase with gross domestic product and are largest for female workers in high-income countries. Men earn greater premiums than women for being employers or own-account professionals. These results are consistent with compensating wage differentials and firm quasi-rents playing important roles in explaining cross-country variation in earnings penalties, and raise questions about the extent to which the unskilled self-employed are rationed out of formal wage work in low-income countries.en-USCC BY 3.0 IGOUNION MEMBERSHIPLIVING STANDARDSPROFESSIONALSSELF EMPLOYEDJOBSEMPLOYMENTRISKSHOUSEHOLD SURVEYEXPORT MARKETSECONOMIC GROWTHSALARIED WORKERSWAGE GAPPRODUCTIONINFORMAL SECTORWAGE DIFFERENTIALMINIMUM WAGEINCOMEINDUSTRY CHARACTERISTICSEMPLOYMENT OPPORTUNITIESSALARYINCOME GROUPAGE GROUPINFORMATIONLABOR FORCEHEALTH INSURANCEPOLITICAL ECONOMYINTERNATIONAL LABOUR ORGANIZATIONJOBEFFECTSLABOR ECONOMICSINCOME TAXLABOUR MARKET RIGIDITIESPRODUCTIVITY INCREASERENTSEFFICIENCY WAGESSMALL BUSINESSLABOR MARKETPROFESSIONAL WORKERSLABOR MARKET FLEXIBILITYPER CAPITA INCOMETRAININGDEVELOPMENT ECONOMICSINDUSTRY WAGEWAGEMIDDLE INCOMEON-THE-JOB TRAININGBARGAINING POWERWORKERINCOME INEQUALITYLABOR PRODUCTIVITYPRODUCTIVITYOLDER WORKERSMARKETSHIGH INCOMEORGANIZATIONSHOUSEHOLD SURVEYSINCOME LEVELSRIGID LABOR MARKETJOB TRAININGWORKER PRODUCTIVITYSTANDARDSLABORTOTAL EMPLOYMENTFORMAL SECTOR WAGEJOB SEARCHLABOR REGULATIONURBAN WORKERSEFFICIENCYHIGH INCOME COUNTRYUNIONSUNEMPLOYMENTEQUITYHUMAN CAPITALFORMAL SECTOR WORKERSWORKERSWAGE BARGAININGWAGESINFORMAL LABOR MARKETSWOMEN WORKERSLABOR MARKET SEGMENTATIONVALUEAVERAGE WAGELABOR CONTRACTINCOME COUNTRYWAGE PREMIUMAGE GROUPSLABOUR MARKETINCOME DISTRIBUTIONINCOME COUNTRIESLABOR MARKET INSTITUTIONSPRODUCTIVE FIRMSOPPORTUNITY COSTSHIGH INCOME COUNTRIESLABOR MARKET INDICATORSEMPLOYERSSALARIED EMPLOYEESECONOMICSSALARIED EMPLOYMENTINSURANCEWAGE STRUCTURELOW INCOMESEVERANCE PAYTHEORYSECURITYENTRY COSTSINVESTMENTRISKHUMAN RESOURCESMALE EMPLOYERSLABOR MARKET REGULATIONSBARGAININGADJUSTMENT COSTEMPLOYEEYOUNGER WORKERSWAGE DIFFERENTIALSINNOVATIONLAWINFORMAL EMPLOYMENTWORKING HOURSFEMALE EMPLOYERSINFORMAL SECTOR WORKERSLABOURPROFITSLABOR MARKETSECONOMIC SHOCKSMIDDLE INCOME COUNTRIESSELF‐EMPLOYMENTWAGE EMPLOYMENTLABOR REGULATIONSINCOME LEVELSEARCH COSTSINCOME GROUPSEMPLOYEESWorking PaperWorld Bank10.1596/1813-9450-7530