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

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  • Gustavo A. Garcia

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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 ndings suggest that, both voluntary and involuntary informal employment co-exist by choice and as a result of labor market segmentation. We also nd that there are striking di erences in labor market characteristics between cities, in particular in the traditional informal segment.

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  • Gustavo A. Garcia, 2014. "Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Lvel for Colombia," ARCHIVOS DE ECONOMÍA 011213, DEPARTAMENTO NACIONAL DE PLANEACIÓN.
  • Handle: RePEc:col:000118:011213
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    1. Dasgupta, Sukti. & Bhula-or, Ruttiya. & Fakthong, Tiraphap., 2015. "Earnings differentials between formal and informal employment in Thailand," ILO Working Papers 994896403402676, International Labour Organization.

    More about this item

    Keywords

    Informality; local labor markets; quantile regression; selection bias; formal/informal wage gap decomposition;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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