The urban informal sector in Central America: Household survey evidence

I utilize the recently available household surveys in the five Spanish-speaking countries of Central America to examine patterns of employment and the structure of earnings in the formal and informal sectors. This is one of the first studies to use crosscountry comparisons to examine competing views of informal sector employment. Most patterns of employment and earnings structure are very similar across the five countries, suggesting the factors influencing the formation of the informal sector are similar across the countries. In particular, the return to education in the informal sector is at least three-fifths that in the formal sector and the male-female differential is much greater in the informal sector. There are some unique patterns for Costa Rica and Nicaragua that suggest that level of development and institutional arrangements may also be important. Copyright (C) 1996 Elsevier Science Ltd