Quantifying the heterogeneity of the Colombian Informal Labor Market

Details

Supervisors

Bruno Van der Linden ; Brian Hugo Feld

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale

Abstract

Labor informality is a central problem in policymaker's agendas across the developing world. Informality can be a sign of segmentation in the labor market when workers are excluded from the formality or can be a choice when the utility obtained from the informal sector is greater than the one obtained in formality. In this work, I use two different methodologies on Colombian data from 2019 to approximate to the size of the informal labor market that is informal as a result of a choice or as a result of market segmentation at the city level. My results conclude that there exists a tremendous heterogeneity in the 23 main urban areas of Colombia. In some of them, informal jobs are mostly the last resort for individuals who escape from unemployment, and for another group of cities, especially in those where the earnings in the formal and the informal sector are similar, it seems to be a choice.