The informal sector on labor income of Paraguay. 2018

• Main Author: Jorge Garicoche Centurión
• Format: Article
• Language: Spanish
• Published: Universidad Nacional de Asunción 2020-01-01
• Series: Población y Desarrollo
• Subjects: labor market; labor informality; matching
• Online Access: http://scielo.iics.una.py/scielo.php?script=sci_abstract&pid=S2076-054X2020005000029&lng=es&nrm=iso&tlng=en

This study evaluates the impact that is generated on labor income from working in the informal sector. Those who are working in a dependency relationship and who are not contributing to a retirement or pension system and those independent workers who are not registered in the Single Taxpayer Registry of the Ministry of Finance of Paraguay are considered as employees in the informal sector. The Permanent Continuing Household Survey (EPHC) for the year 2018 of the General Directorate of Statistical Survey and Censuses (DGEEC) is used as a data source. To measure the effect that a worker is employed in the informal sector, an analysis is proposed using 2 methods: i) Mincer equation, ii) Estimates via Matching. The investigation finds that employees in the informal sector have 27% less labor income per hour compared to those employed in the formal sector. Estimates were made both by the Mincer equation and by pairing methods. In both cases similar results are presented, so the impact found acquires relevance.