Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia

Garcia Cruz, Gustavo Adolfo (2014): Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia.

Abstract

The labor market in developing countries is remarkably heterogeneous with a small productive formal sector, enjoying high wages and attractive employment conditions and another large informal sector with low productivity and volatile wages. The informal sector is particularly diverse. In this paper we examine the heterogeneity of the informal sector at regional level in Colombia. In general, our findings suggest that, both voluntary and involuntary informal employment co-exist by choice and as a result of labor market segmentation. We also find that there are striking differences in labor market characteristics between cities, in particular in the traditional informal segment.

• Item Type: MPRA Paper
• Language: English
• Keywords: Informality, local labor markets, quantile regression, selection bias, formal/informal wage gap decomposition
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J42 - Monopsony ; Segmented Labor Markets; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements

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