Formal Measures of the Informal Sector Wage Gap in Mexico, El Salvador, and Peru

Douglas Marcouiller, Veronica Ruiz de Castilla and Christopher Woodruff
Additional contact information
Veronica Ruiz de Castilla: University of Texas-Austin

No 294., Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: Using comparable micro-level data from three countries, we ask what type of person works in the informal sector and whether informal workers earn lower wages than observationally equivalent workers in the formal sector. The characteristics of informal workers are similar across countries. Surprisingly, when we control for these personal characteristics, we find a significant wage premium associated with formal employment in El Salvador and Peru but a premium associated with work in the informal sector in Mexico. A model of endogenous selection offers little help in explaining the differences in wage patterns. The research casts doubt on the received wisdom that the informal sector, always and everywhere, is a poorly-paid but easily- entered refuge for those who have no other employment opportunities.

Keywords: Informal sector; wage differentials; Mexico; El Salvador; Peru (search for similar items in EconPapers)
JEL-codes: J30 O17 (search for similar items in EconPapers)
Pages: 30 pages
Date: 1995-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published, Economic Development and Cultural Change, 1997, 45, 367-392.

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Related works:
Journal Article: Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:boc:bocoec:294

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