Household Saving and labor informality: The Case of Chile

ALFREDO SCHCLAREK; MAURICIO CAGGIA

Washington

Workshop; IDB Workshop Domestic Savings in Latin America and the Caribbean; 2014

Banco Interamericano de Desarrollo

The purpose of this paper is to compare the saving behavior of formal and informal workers. In addition, we provide a socioeconomic and financial characterization of informal workers. We use the Financial Household Survey conducted by the Central Bank of Chile in 2007, 2008, 2009 and 2010, which covers between 3.828 and 1.190 urban households from Chile. We perform both OLS and probit regressions. Our cross-section regression results indicate that in general informal households save less than formal households. However, there are some robustness tests that indicate that there is no difference in the saving behavior between these two groups. Further, descriptive data indicates that informal workers have less access to financial services and possess less financial assets and liabilities. In terms of policy implications, it seems that combating informality may not only improve the well-being of workers, but may also have positive consequences on the aggregate saving rate. In addition, for Chile, it is evident that there is ample space to improve the access to financial services not only for informal but also for formal workers.