Persistence of Informality in a Developing Country

19 Pages Posted: 3 May 2012

See all articles by Jhon James Mora

Jhon James Mora

Universidad ICESI - Economics & Management

Juan Muro

Universidad de Alcalá

Date Written: March 29, 2012

Abstract

Informality is a common phenomenon in developing countries and an unusual one in industrialized countries. The persistence of informal employment is indicative of the impossibility of moving out of this status for a certain period of time. Using pseudo panel data, empirical evidence is presented to show that this phenomenon occurs in a developing country like Colombia where education helps mitigate said persistent occurrence. The authors also present evidence that a minimum salary increase does not only result in increased informality, but also increases the persistence of informality. This kind of evidence can be used for discussing the persistence of informality in other developing countries.

Keywords: Dynamic Informality, Pseudo Panel, Probit Models

JEL Classification: C36, C51 J81, J88

Suggested Citation

Mora Rodriguez, Jhon James and Muro, Juan, Persistence of Informality in a Developing Country (March 29, 2012). Available at SSRN: https://ssrn.com/abstract=2049980 or http://dx.doi.org/10.2139/ssrn.2049980

Jhon James Mora Rodriguez (Contact Author)

Universidad ICESI - Economics & Management ( email )

Cali
Colombia

Juan Muro

Universidad de Alcalá ( email )

Plaza de la Victoria s/n
Alcala de Henares, Madrid 28802
Spain

HOME PAGE: http://www2.uah.es/juanmuro

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