Poverty and informality in Ecuador

This paper uses national representative data from the Ecuadorian Family Expenditure survey to study the determinants of poverty and informality in the country, taking into account the simultaneous two-way relationship between these two phenomena. The results support the view of a heterogeneous informal market, where informal work is both a demand-led phenomenon as well as a voluntary and primarily supply-led form of employment. As such, informal salaried work and self-employment are both a last resort option for low-skilled workers and a voluntary choice for the more educated and entrepreneurial ones.