An approximation to the informal-formal wage gap in Colombia 2008-2012

Abstract

This document provides recent evidence about the persistency of wage gaps between formal and informal workers in Colombia by using a non-parametric method proposed by Ñopo (2008a). Over a rich dataset at a household level during 2008-2012, it is found that formal workers earn between 30 to 60 percent more, on average, than informal workers. Despite of the formality definition - structuralist or institucionalist- adopted, it is clear that formal workers have more economic advantages than informal ones, but after controlling by demographic and labor variables an important fraction of the gap still remains unexplained.