Firms and informality a new data base for Colombia

The article Firms & Informality identifies the main stylized facts of business informality in Colombia. To identify these facts, an innovative database (EEG) was built by attaching information from the Micro-business Survey (EMICRON), the structural surveys of manufacturing, trade, and services (EAM, EAC and EAS) and the questions asked to the employer by the household survey. Additionally, some missing information was completed by using the GEIH questions addressed to the workers. According to the exercise the main features that a model of informality in Colombia should consider are the following: 1. The share of microbusiness and self-employment is high. 2. Although informality is decreasing in firm´s size it might not be assumed as restricted to microbusiness. 3. The intensive and extensive margin of informality should be included independently, because they do not always move in the same pace/direction 4. Both worker´s and firm´s heterogeneity should be considered since the reasons to be informal vary among informality types, but informality might also cause further heterogeneity. The heterogeneity variable should be observable to allow the implementation of policy recommendations. 5. Some institutional features that can be contemplated in a model are: the large, exempted tax brackets, the profit taxes formal labor cost deduction, and the limited scope of the single tax scheme that causes a rather continuous than binary variable of informality in the country.