“Evolución y determinantes del empleo informal en el Ecuador: un análisis econométrico para las principales ciudades del país periodo 2019-2024”

Abstract

This study aims to analyze the evolution and determinants of informal employment in Ecuador during 2019–2024 in the country’s main cities. The study is based on labor market dualism theories, which explain the persistence of informality as a result of structural segmentations in employment. The Probit model is used to estimate changes in the probability of informal employment during the period 2019–2024, based on repeated cross-sectional databases. The results indicate the largest increases for 2024 in the cities of Cuenca (9.16 percentage points [pp]), Machala (8.79 pp), and Guayaquil (7.70 pp). Furthermore, informal employment is significantly influenced by individual and labor characteristics, in which educational level has a negative effect; that is, a higher level of education reduces the probability of entering informal employment by 3.5 percentage points. Similarly, the sectoral composition of economic activity has a varying impact on labor market participation, as residing in an urban area reduces this probability by 11.4 percentage points compared to rural areas. The study confirms that informal employment remains a persistent problem in Ecuador’s labor market, highlighting the need for policies aimed at improving job quality.