Table 3: Wage Gaps across Formal and Informal Workers, 2002-2015

||Unadjusted|Adju|sted|
|---|---|---|---|
||(1)|(2)|(3)|
|Informal employee|-0.582***|-0.380***|-0.339***|
||(0.00438)|(0.00414)|(0.00408)|
|Self-employed|-0.795***|-0.588***|-0.434***|
||(0.00457)|(0.00436)|(0.00441)|
|2015|-0.0840***|-0.152***|-0.146***|
||(0.00348)|(0.00325)|(0.00314)|
|2015*Informal employee|0.0465***|0.0727***|0.106***|
||(0.00520)|(0.00484)|(0.00464)|
|2015*Self-employed|0.0973***|0.0930***|0.115***|
||(0.00544)|(0.00506)|(0.00488)|
|Individual characteristics|No|Yes|Yes|
|Sector-occupation dummies|No|No|Yes|
|Country fxed efects|Yes|Yes|Yes|
|Observations|620,397|619,562|619,560|
|R-squared|0.219|0.327|0.396|

_Source_ : Authors’ calculations based on data from the Socioeconomic Database for Latin America and the Caribbean, World Bank and Center for Distributive, Labor and Social Studies of the Universidad Nacional de La Plata (CEDLAS) (http://sedlac.econo.unlp.edu.ar/eng).

_Note:_ Each column reports regression results of the effect of the listed variable on log wages. Individual characteristics include the interactions of worker’s gender, five education categories (primary completed or less, high school dropouts, high school graduates, college dropouts, and college graduates or more), and fiveyear intervals of experience. Supplementary online appendix S1.1 provides a list of the sectors and occupations. Countries included coincide with those in figure 7 with the exception of Chile and Paraguay, where harmonized information on occupations is not available, and therefore, results for column 3 cannot be computed. Results in columns 1 and 2 are qualitatively similar when including these countries and available from the authors upon request. Country weights are used, but they were re-scaled so that each country has the same weight in the regression. Robust standard errors in parenthesis: ***p _<_ 0.01, **p _<_ 0.05, *p _<_ 0.1.

these penalties, but they remain high, at -.339 (-.434) log points for informal employees (selfemployed).<sup>20</sup> The interaction terms in the regression suggest that these gaps declined between 2002 and 2015, possibly contributing to the decline in inequality. According to column 3, the informal (self-employed) wage gap declined by approximately 11 (12) log points. Amarante and Arim (2015) study wage structure effects associated with changes in formality status across the distribution of wages in five Latin American countries during the 2000s in a sample that concentrates on wage employees (excluding the self-employed workers). They conclude that changes in the formal wage premium across the distribution of wages in each country 20The presence of a formality premium was further corroborated using short panels from Argentina, Brazil, and Mexico from years 2002 to 2015. Movers from informal wage employment to formal wage employment within a 12-month window obtain average wage gains of 0.173 (Argentina), 0.142 (Brazil), and 0.076 (Mexico) with respect to stayers, after partialling out worker and year fixed effects. The corresponding wage gains for workers moving to formal employment from self-employment are almost double: 0.300 (Argentina), 0.126 (Brazil), and 0.185 (Mexico). Detailed tables are available upon request.

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