Regional wage gaps, education, and informality in an emerging country. The case of Colombia

Produced by: 
Universitat de Barcelona
Available from: 
January 2015
Paper author(s): 
Paula Herrera-Idárraga (Pontificia Universidad Javeriana)
Enrique López-Bazo (Faculty of Economics, University of Barcelona)
Elisabet Motellón (Faculty of Economics, University of Barcelona)
Education - Health
Poverty - Inequality - Aid Effectiveness

This paper uses Colombian micro-data to analyze the role of education and informality on regional wage differentials. Our hypothesis is that apart from differences in the endowment of human capital across regions, regional heterogeneity in the incidence of informality is another important source of regional wage inequality in developing and emerging countries. This is confirmed by the evidence from Colombia, which in addition reveals remarkable heterogeneity across territories in the wage return to individuals’ characteristics. Regional heterogeneity in returns to education is especially intense in the upper part of the wage distribution. In turn, heterogeneity in the informal pay penalty is more relevant in the lower part.


Research section: 
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