Assessing the loss due to working in the informal sector in Venezuela

Josefa Ramoni () and Giampaolo Orlandoni ()
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Josefa Ramoni: Universidad de Santander

Lecturas de Economía, 2016, issue 84, 33-58

Abstract: In Venezuela, 40% of the workers are employed in the informal sector. This sector is known for being underproductive, meaning that the income received by its workers is less than what they could earn working in formal sector jobs. This paper uses data from the Household Sample Survey (2012-2013) to estimate differencein-differences linear and quantile regression models, controlling for some demographic characteristics, to quantify the loss associated with working in this market, as an indirect way to quantify the size of the informal sector. The parallel trend assumption is satisfied through propensity score matching, exception made for the highest quartile. The results suggest that informal sector workers lose about 34% of their potential income, loss that is larger for women and with an ambiguous behavior across levels of education. The study also indicates that the average difference in wages between the two sectors tends to narrow over time

Keywords: employment in the informal sector; Venezuelan labor market; DID regression models; quantile regression; propensity score matching (search for similar items in EconPapers)
JEL-codes: J24 J31 J46 (search for similar items in EconPapers)
Date: 2016
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Journal Article: Assessing the loss due to working in the informal sector in Venezuela (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:lde:journl:y:2016:i:84:p:33-58

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DOI: 10.17533/udea.le.n84a02

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