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Title: Analysis of the Formal/Informal Wage Inequalities in Colombia: A Semiparametric Approach
Authors: Ramoni-Perazzi, Josefa
Orlandoni-Merli, Giampaolo
Keywords: Colombian labor market
Informal sector
Kernel density function
Wage gap
Issue Date: 1-Mar-2021
Publisher: Journal of Applied Social Science
Abstract: Informality is a common problem in Colombia, with almost 50 percent of the workers employed in this sector. This may be a solution for unemployment, but it is a lose/lose game unless the individuals have a comparative advantage in the informal sector. This article uses information from the Colombian Great Integrated Household Survey (GIHS) to analyze the wage gap between formal and informal urban sectors in two different periods, 2008:4 and 2017:4, using a semiparametric approach. Kernel density functions by groups are estimated; counterfactuals are generated by weighting wages of informal sector workers by their probability of working in the formal sector, to estimate how much an informal sector worker could make if treated as formal, according to his characteristics. The results indicate that only some groups (self-employed and some entrepreneurs) are better off if formalized.
Description: Digital
Appears in Collections:DDABA. Artículos de Investigación

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