Entrepreneurship in the informal sector as a form of labour market adjustment – The case study of Macedonia

Nikoloski, Dimitar and Pechijareski, Ljupcho and Pechijareski, Goran (2012) Entrepreneurship in the informal sector as a form of labour market adjustment – The case study of Macedonia. In: 5th International conference for entrepreneurship, innovation and regional development (ICEIRD), June 1-2, 2012, Sofia.

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The past two decades Macedonia has gone through the process of transition which is still shaping the social, political and economic ambience in the country. The initial transitional recession has inter alia manifested salient effects on the labour market performance. Macedonia is among rare countries, where the unemployment rate during the whole period of transition hovers above 30%. Even though there is some criticism regarding the accuracy of the Macedonian unemployment rate estimated by the Labour Force Survey it is still evident that we are facing an odd phenomenon. By using the Keynesian terminology, the Macedonian labour market experiences a suboptimal equilibrium assumed as a state where significant part of resources are not utilised or underutilised. We argue that this suboptimal equilibrium to great extent is result of the alternative labour market adjustment mechanisms that mitigate the high and sustained unemployment. These mechanisms cushion the social implications of unemployment by absorbing a part of unemployed workforce and/or providing additional incomes for households that enables their basic subsistence. One form of adjustment mechanism among the unemployed workers is the employment in the informal sector that provides the necessary income support for the households. Generally, the informal sector in transition countries is marked by a number of peculiarities which make informality in transition distinct from that observed elsewhere. Although, the informal economy may take different forms and is difficult to measure it is characterised by strong entrepreneurial dynamism. In this paper we will make an attempt to identify the profile of the unemployed workers that undertake various forms of entrepreneurial activities in the informal sector. For this purpose we will use results from the survey carried on a representative sample of registered unemployed workers in Macedonia. Furthermore, we will estimate an econometric model that will assist in the process of identification of relevant factors that influence the entrepreneurial activities in the informal sector. Finally, we will formulate appropriate policy measures that will target the informal sector in order to provide the necessary conditions for transferring the informal businesses to the formal sector of the economy.

Item Type: Conference or Workshop Item (Paper)
Subjects: Scientific Fields (Frascati) > Social Sciences > Economics and Business
Divisions: Faculty of Economics
Depositing User: Mr Dimitar Risteski
Date Deposited: 11 Dec 2019 11:18
Last Modified: 11 Dec 2019 11:18
URI: http://eprints.uklo.edu.mk/id/eprint/2164

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