Formal versus Informal Labor Market Segmentation in Iran

This article examines whether there is a wage gap premium in the formal sector versus the informal sector of the Iranian labor market. We used household survey data conducted by the Statistical Centre of Iran for ۲۰۰۱, ۲۰۰۶, ۲۰۱۱, and ۲۰۱۶ to investigate the characteristics of the informal sector as well as differentials in wage structures between sectors. The findings indicate that a significant part of the Iranian labor force is employed in the informal sector, and this sector shows different behavior from the formal sector in determining wages. It has also been concluded that there is a wage gap between the formal and informal sectors, and this gap after a minimal increase in ۲۰۰۶, narrowed over time.

Keywords:

Labor Market Segmentation , Informal sector , Wage Gap , Human capital , Iran