A SEM Analysis of Work Preferences, Motivations and Earnings in Informal Market

Abstract

The study aims at investigating the effects of earnings and improvement in human capital on the work satisfaction considering the mediating role of motivational factors for a unique sample of female workers involved in informal market in Punjab, Pakistan. The survival analysis based upon structural equation modeling has been used to draw empirical evidences. Consistent with the backward-bending labor supply curve, higher earnings appears to be a negative determinant of work satisfaction for female employed in informal sector. An important insight of such results is the cost (labor-leisure tradeoff) and work conditions, which are avoided with higher earnings of female workers in informal market.  Besides, results drawn from structural equation modeling (SEM) indicated that female workers in informal market are penalized by health hazards (injuries), domestic responsibilities (opportunity cost) and restrictions to spend their earnings (lack of independence), which further adds miseries to their lives. Motivational factors such as rewards, education, advance payments and awareness (information regarding labor laws) can have positive associations with their earnings.  Conversely, as female workers draw themselves out of informal market, they acquires more education, which is the very reason that education has a negative relationship with work satisfaction of female workers derived from the informal market. All of the factors mentioned above call for the attention of policy makers to make substantial investment towards the development of human capital particularly in the informal sector.