Scandinavian Working Papers in Economics

Working Papers,
University of Aarhus, Aarhus School of Business, Department of Economics

No 09-8: Participation and Sector Selection in Nicaragua

Dario Pozzoli () and Marco Ranzani ()
Additional contact information
Dario Pozzoli: Department of Economics, Aarhus School of Business, Postal: Frichshuset Hermodsvej 22, 8230 Åbyhøj, Denmark
Marco Ranzani: Universita’ Cattolica, Postal: Largo Gemelli, 1 20123 Milano, Italy

Abstract: This paper investigates the structure of the labor market in Nicaragua and is aimed at understanding the determinants of the choice between a number of segments, namely inactivity, unemployment, agriculture, formal and informal sector. In addition, a model with a separate participation equation is estimated: it allows understanding that age is mainly a supply side factor, while education is an important element determining employers’ choice. Information networks, captured by the presence of a household member working in the formal sector, and geographical barriers to mobility also play a leading role.

Keywords: Segmentation; Multisector labor markets; Nicaragua

JEL-codes: J42; O17; O54

41 pages, May 15, 2009

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