The geography of informality: the case of Colombia

Abstract. More than 50% of Latin America’s labor force is estimated to be in the informal sector, a persistent issue for three decades. Despite extensive literature, sub-national rates remain underexplored due to data limitations. This study measures municipal informality in Colombia from 2005 to 2021 using Small Area Estimation (SAE) techniques. Results show that municipal informality ranges from 25% to 97%, indicating significant heterogeneity. While informality declined from 2005 to 2016, high-informality municipalities saw setbacks in 2021 due to the pandemic. The study also identifies structural changes in informality determinants and spatial autocorrelation over time.