Labor Market Rigidities and Informality in ColombiaEconomía

Informality has been at the center of the economic debate in Colombia as a result of the high levels prevalent in the country and its substantial increase during the 1990s. The informal sector includes a range of heterogeneous activities, from unpaid labor to a number of unregulated salaried jobs. Informality is thought to have negative implications, mainly through inferior working conditions, lack of formal health, unemployment, and old age insurance, and low productivity levels for firms. Alternative definitions of informality have been proposed in the literature, each implying a different approach to this phenomenon.