Is there a Link between Quality of Employment and Indebtedness? The Case of Urban Low-income Households in Ecuador

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Is there a Link between Quality of Employment and Indebtedness? The Case of Urban Low-income Households in Ecuador

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dc.contributor.author Floro, Maria S.
dc.contributor.author Messier, John
dc.date.accessioned 2009-02-20T14:31:06Z
dc.date.available 2009-02-20T14:31:06Z
dc.date.created 2007
dc.date.issued 2007
dc.identifier.uri http://hdl.handle.net/1961/4993
dc.description Working Paper No. 2007-10. 48 pages. en
dc.description.abstract In recent decades, there has been a marked increase in the informalization of employment in developing countries. The risk and insecurity associated with a growing number of informal sector jobs have important consequences in inducing or maintaining vulnerability. This paper explores the incidence of high indebtedness or financial stress among urban, low-income households in Ecuador and demonstrates its interconnectedness with the quality of employment. The implications are non-trivial in the sense that high debt service burden, as with the lack of credit access, can undermine investment and maintain low productivity and earnings. It can also lead to higher probability of loan default and to increase in interest rates or termination of credit line. There are also longer term welfare consequences in terms of households’ ability to cope with future shocks such as illness. The analysis is based on a 2002 sample of men and women in urban, poor households in Ecuador. By means of tobit and regression analyses, the paper demonstrates that labor market informalization has led to higher incidence of indebtedness. Moreover, there are differentiated patterns of debt servicing among women and men in urban, poor households. The results provide a more nuanced yet illuminating picture of the interconnectedness of employment, financial stress and vulnerability. We argue that informalization of employment has consequences in other dimensions of vulnerability of households such as high debt servicing, and therefore requires rethinking of current economic and social policies in order to effectively reduce poverty. en
dc.description.sponsorship Department of Economics, American University en
dc.language.iso en_US en
dc.publisher Department of Economics, American University en
dc.rights Copyright © 2007 by Maria Floro and John Messier. All rights reserved. Readers may make verbatim copies of this document for non-commercial purposes by any means, provided that this copyright notice appears on all such copies. en
dc.subject.other Ecuador en
dc.title Is there a Link between Quality of Employment and Indebtedness? The Case of Urban Low-income Households in Ecuador en
dc.type Working Paper en


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