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Informal employment remains ubiquitous in developing-country labour markets. While informality has been associated with poor outcomes—such as low wages and precarious working conditions—it has been argued that some informal jobs could be beneficial for workers due to non-pecuniary characteristics—such as autonomy and flexibility. We revisit this long-running theoretical debate by analysing job satisfaction, a broad measure of worker welfare. Using two waves of the Indonesian Family Life Survey, we estimate fixed effects regressions to show that informal workers are less likely to be satisfied with their jobs than formal workers. This finding is robust to different estimation strategies, including a matched sample of sector movers and stayers. However, the likelihood of job satisfaction varies considerably among informal workers, with informal self-employed workers being more likely to be satisfied with their jobs than informal salaried workers. Moreover, this satisfaction differential only applies to informal salaried workers in informal enterprises, suggesting a need to better understand the employment conditions facing this group of workers. [ABSTRACT FROM AUTHOR]

Resumen: Partiendo de un modelo del empleo informal que presupone su heterogeneidad, los autores estiman la brecha salarial entre trabajadores formales e informales en diferentes segmentos de la distribución de ingresos mediante regresiones cuantílicas incondicionales estimadas con datos de la Encuesta de vida familiar de Indonesia. Confirman la considerable penalización de ingresos observada en estudios anteriores para muchos trabajadores informales, pero también la existencia de un grupo entre ellos cuyos ingresos son similares a los de los trabajadores formales. Estas estimaciones concuerdan con el modelo de segmentación del empleo informal de Fields (1990 y 2005). [ABSTRACT FROM AUTHOR]

In contrast to the majority of studies that have treated informal workers as a single homogeneous group, this article accounts for the possibility of "winners" and "losers" among informal workers. Applying unconditional quantile regressions to data from the Indonesian Family Life Survey, the authors are able to estimate the formal–informal wage gaps for different segments of the earnings distribution. Although the evidence confirms the existence of a substantial earnings penalty for many informal workers, there is also a group who earn roughly similar incomes to formal workers. The findings are consistent with Fields's (1990 and 2005) model of heterogeneous informal employment. [ABSTRACT FROM AUTHOR]