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Assessing the loss due to working in the informal sector in Venezuela

Author

Listed:
  • Josefa Ramoni

    (Universidad de Santander)

  • Giampaolo Orlandoni

    (Universidad de Santander)

Abstract

In Venezuela, 40% of the workers are employed in the informal sector. This sector is known for being underproductive, meaning that the income received by its workers is less than what they could earn working in formal sector jobs. This paper uses data from the Household Sample Survey (2012-2013) to estimate differencein-differences linear and quantile regression models, controlling for some demographic characteristics, to quantify the loss associated with working in this market, as an indirect way to quantify the size of the informal sector. The parallel trend assumption is satisfied through propensity score matching, exception made for the highest quartile. The results suggest that informal sector workers lose about 34% of their potential income, loss that is larger for women and with an ambiguous behavior across levels of education. The study also indicates that the average difference in wages between the two sectors tends to narrow over time

Suggested Citation

  • Josefa Ramoni & Giampaolo Orlandoni, 2016. "Assessing the loss due to working in the informal sector in Venezuela," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 84, pages 33-58, Enero - J.
    • Handle: RePEc:lde:journl:y:2016:i:84:p:33-58
    DOI: 10.17533/udea.le.n84a02
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    Keywords

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    JEL classification:

    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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