Is Informal Employment Sector Hereditary? Evidence from Sri Lanka
Priyanga Dunusinghe *
Department of Economics, University of Colombo, Sri Lanka.
*Author to whom correspondence should be addressed.
Abstract
Intergenerational social mobility along the line of employment, income, wealth, and social status is a central to reducing poverty and inequality in the society. This study examines the relationship between parents and their children’s choice on employment sector. This study employs a 3SLS estimating procedure and use nationally representative data from the Labour Force Survey 2018. Our analysis found that sons/daughters’ employment choices is strongly correlated with their parents’ employment status (formal vs. informal). There is a higher probability that the sons/daughters of informal workers engage in informal jobs in the labour market compared to sons/daughters of formal workers. It is also found that better education leads to greater social mobility, nevertheless, education is less effective in promoting formal employment among sons/daughters of informal workers. Hence, fair and competitive access to formal employment is one of the policy priorities in improving socio-economic mobility of less advantaged groups in the society.
Keywords: Social mobility, informality, employment choice, Probit model, Sri Lanka