Informal jobs and contribution to social security: Evidence from a double selection model

Esteban Puentes and Dante Contreras

Working Papers from University of Chile, Department of Economics

Abstract: We estimate a double selection model to study informality in the Chilean labor market. We use three different measures of informality: lack of a signed contract, contribution to social security and both at the same time. The double selection states that, in a first stage, individuals chose between the formal and informal sector, the one that gives them the highest utility, and in a second stage, employers will select some workers from the ones that chose the formal sector, but some workers will not be chosen and then will be excluded from the formal sector. We find that this double selection model fits the data better than a simple selection model, confirming that there is some exclusion. We also find that education is that variable that is most highly correlated with informality. Finally, the results suggest that the head of the household is less likely to be informal, which could imply that informality affects mostly the secondary labor force in the household. Also, the number of children are negatively correlated with being formal.

JEL-codes: J40 J42 (search for similar items in EconPapers)
Date: 2009-12
New Economics Papers: this item is included in nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.econ.uchile.cl/uploads/publicacion/4c5a ... d97-e33a00483535.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:udc:wpaper:wp307

Access Statistics for this paper

More papers in Working Papers from University of Chile, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Mohit Karnani ().