Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89003
Authors: 
Caro, Lorena
Galindo, Arturo
Melendez, Marcela
Year of Publication: 
2012
Series/Report no.: 
IDB Working Paper Series IDB-WP-325
Abstract: 
This paper explores the links between labor formality, access to credit and firm performance in Colombia using Annual Manufacturing Survey data for the period 2000-2009. A significant though small relationship is found between access to credit and informality. The results suggest that a 10 percent increase in the ratio of credit to sectoral output increases labor formality between 0. 76 and 1. 14 percentage points. This effect vanishes as a firm’s financial constraint increases. The paper also reports a strong correlation between labor formality and firm performance measured as output and employment growth. A one percentage point increase in labor formality is associated with an 8. 5 percent increase in output and an 11 percent increase in employment growth.
JEL: 
E26
G21
O16
O4
Document Type: 
Working Paper

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