Is Informal Employment Sector Hereditary? Evidence from Sri Lanka


Published: 2021-12-06

Page: 703-713

Priyanga Dunusinghe *

Department of Economics, University of Colombo, Sri Lanka.

*Author to whom correspondence should be addressed.


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

How to Cite

Dunusinghe, P. (2021). Is Informal Employment Sector Hereditary? Evidence from Sri Lanka. Asian Journal of Economics, Finance and Management, 3(1), 703–713. Retrieved from


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