Determinants of the transition between the formal and informal sectors in Mexico, 2010 and 2017
Keywords:informality, formality, transition, Mexico
In the Mexican labor market, the transition from the informal to the formal sector and inversely depends on many factors at the individual level and the socioeconomic context of the country at a given moment. The main objective of this research is to identify the sociodemographic factors that influence an individual's transition from the informal sector to the formal sector and vice versa in Mexico. To respond to this task, the information from the Retrospective Demographic Survey (EDER) of 2017 was used. The statistical technique used was logistic regression to identify the odds ratios of the different factors that determine the transition from informality to formality and vice versa. The main results indicate that, the older the age at first employment, the propensity to move from informal to formal becomes less and less. It was also found that the more years of work experience they have, the lower the propensity to move from the informal to the formal sector. The results also indicate that, the smaller the size of the locality, the propensity to move from informal to formal decreases. Finally, it was found that the older the first job, the greater the probability of going from the formal to the informal sector and as the number of workers in a productive unit increases, the propensity to transition to informality decreases.
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