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Informality: Sectoral Selection and Earnings in Uruguay

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  • Marisa Bucheli

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Rodrigo Ceni

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

In this paper we define informal workers as those who are not contributing to the social security system. We analyse the likelihood of being informal and we estimate the differentials in earnings between sectors using both the OLS estimation and a switching regression model. We assess the premium for being formal by predicting five different proxies of the average gap. We use the crosssection data reported in a 2005 household survey. We find that formality is more likely among the better-educated, women, people residing in the capital city, heads of households and full-time workers. In addition, we find that according to the five measures of the gap, earnings are higher in the formal than in the informal sector.

Suggested Citation

  • Marisa Bucheli & Rodrigo Ceni, 2007. "Informality: Sectoral Selection and Earnings in Uruguay," Documentos de Trabajo (working papers) 2007, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:2007
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    File URL: https://hdl.handle.net/20.500.12008/2086
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    References listed on IDEAS

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    Cited by:

    1. Bucheli, Marisa & Forteza, Alvaro & Rossi, Ianina, 2008. "Work history and the access to contributory pensions in Uruguay : some facts and policy options," Social Protection Discussion Papers and Notes 90345, The World Bank.
    2. Amarante, Verónica & Gómez, Marcela, 2016. "El proceso de formalización en el mercado laboral uruguayo," Estudios y Perspectivas – Oficina de la CEPAL en Montevideo 39859, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    3. Ceyhun Elgin & Muhammed Burak Sezgin, 2017. "Sectoral Estimates of Informality: A New Method and Application for the Turkish Economy," The Developing Economies, Institute of Developing Economies, vol. 55(4), pages 261-289, December.
    4. Rodrigo Ceni, 2014. "Informality and government enforcement in Latin America," Documentos de Trabajo (working papers) 14-21, Instituto de Economía - IECON.
    5. Maira Caño-Guiral, 2015. "The non-observed economy in Uruguay. A look at the first decade of the 21st century," Documentos de trabajo 2015004, Banco Central del Uruguay.
    6. Rodrigo Ceni, 2014. "Social security schemes and labor supply in the formal and informal sectors," Documentos de Trabajo (working papers) 14-12, Instituto de Economía - IECON.
    7. Rodrigo Ceni, 2017. "Pension schemes and labor supply in the formal and informal sector," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-29, December.
    8. Johan Sandberg, 2012. "Conditional Cash Transfers and Social Mobility: The Role of Asymmetric Structures and Segmentation Processes," Development and Change, International Institute of Social Studies, vol. 43(6), pages 1337-1359, November.

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    More about this item

    Keywords

    informal sector; wage differential;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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