Main determinants of informality: a regional analysis for Mexico

Abstract

The aim of this study is to examine the most frequently-cited factors in order to explain informality in Mexico and to know if they have the same effect across the country. First, through cross-section analysis of microdata obtained from the Socio-economic Conditions Modules, features and current state of the phenomenon are described. Then, by using logit type econometric models, probabilities of being informal in all regions of the country are estimated. The results show that, in each one, the most common causes accounting for informality influence differently. Studying this phenomenon regionally, and not in an aggregated manner, will lead to a better understanding of its causes, which will help designing state and federal public policies in order to eradicate these problems in the future.

Keywords

• informalidad
• exclusión
• escape
• seguridad social
• entropía de Shannon
• regresión logit
• informality
• exclusion
• exit
• social security
• Shannon entropy
• logit regression