Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Lvel for Colombia

The labor market in developing countries is remarkably heterogeneous with a small productive formal sector, enjoying high wages and attractive employment conditions and another large informal sector with low productivity and volatile wages. The informal sector is particularly diverse. In this paper we examine the heterogeneity of the informal sector at regional level in Colombia. In general, our ndings suggest that, both voluntary and involuntary informal employment co-exist by choice and as a result of labor market segmentation. We also nd that there are striking dierences in labor market characteristics between cities, in particular in the traditional informal segment.