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“Regional wage gaps, education, and informality in an emerging country. The case of Colombia.”

Author

Listed:
  • Paula Herrera-Idárraga

    () (Department of Econometrics. University of Barcelona)

  • Enrique López-Bazo

    () (Department of Econometrics. University of Barcelona)

  • Elisabet Motellón

    () (Department of Econometrics. University of Barcelona)

Abstract

This paper uses Colombian micro-data to analyze the role of education and informality on regional wage differentials. Our hypothesis is that apart from differences in the endowment of human capital across regions, regional heterogeneity in the incidence of informality is another important source of regional wage inequality in developing and emerging countries. This is confirmed by the evidence from Colombia, which in addition reveals remarkable heterogeneity across territories in the wage return to individuals’ characteristics. Regional heterogeneity in returns to education is especially intense in the upper part of the wage distribution. In turn, heterogeneity in the informal pay penalty is more relevant in the lower part.

Suggested Citation

  • Paula Herrera-Idárraga & Enrique López-Bazo & Elisabet Motellón, 2015. "“Regional wage gaps, education, and informality in an emerging country. The case of Colombia.”," AQR Working Papers 201507, University of Barcelona, Regional Quantitative Analysis Group, revised Jan 2015.
  • Handle: RePEc:aqr:wpaper:201507
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    References listed on IDEAS

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    Keywords

    Regions; Wage differentials; Quantile-based decompositions; Formal/Informal Jobs; Economic Development JEL classification: C21; J31; J38;

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