Informality and Overeducation in the Labor Market of a Developing Country

Paula Herrera-Idárraga, Enrique Lopez-Bazo and Elisabet Motellón

No 201303, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: In this paper, we explore the connection between labor market segmentation in two sectors, a modern protected formal sector and a traditional- unprotected-informal sector, and overeducation in a developing country. Informality is thought to have negative consequences, primarily through poorer working conditions, lack of social security, as well as low levels of productivity throughout the economy. This paper considers an aspect that has not been previously addressed, namely the fact that informality might also affect the way workers match their actual education with that required performing their job. We use micro-data from Colombia to test the relationship between overeducation and informality. Empirical results suggest that, once the endogeneity of employment choice has been accounted for, formal male workers are less likely to be overeducated. Interestingly, the propensity of being overeducated among women does not seem to be closely related to the sector choice.

Keywords: Segmented labor markets; Formal/Informal employment; Human capital; Economic development. JEL classification: O15; J21; J24. (search for similar items in EconPapers)
Pages: 34 pages
Date: 2013-04, Revised 2013-04
New Economics Papers: this item is included in nep-dev and nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Informality and Overeducation in the Labor Market of a Developing Country (2013)
Working Paper: Informality and Overeducation in the Labor Market of a Developing Country (2013)
Working Paper: Informality and overeducation in the labor market of a developing country (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:201303

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