Household saving and labor informality : the case of Chile

This paper compares the saving behavior of formal and informal workers and additionally provides a socioeconomic and financial characterization of informal workers in Chile. The paper uses the Financial Household Survey conducted by the Central Bank of Chile in 2007, 2008, 2009 and 2010, which covers between 1,740 and 2,533 urban households, performing both OLS and probit regressions. The cross-section regression results indicate that, in general, informal households save less than formal households. Further, descriptive data indicate that informal workers have less access to financial services and possess less financial assets and liabilities. In terms of policy implications, combating informality may not only improve the well-being of workers, but may also have positive consequences on the aggregate saving rate. In addition, for Chile, it is evident that there is ample room to improve access to financial services not only for informal but also for formal workers.