Is Informality a Good Measure of Job Quality?: Evidence from Job Satisfaction Data

Dec 2008
The formality status of a job is the most widely used indicator of job quality in developing countries. However, a number of studies argue that, at least for some workers, the informality status may be driven by choice rather than exclusion. This paper uses job satisfaction data from three low-income countries (Honduras, Guatemala and El Salvador) to assess whether informal jobs are less valued than formal jobs. The paper finds substantial differences in job satisfaction within different types of informal jobs. More importantly, according to self-reported measures of job satisfaction, informality is not necessarily associated with poor job quality. This correspondence varies across countries, and seems to be lower for less-skilled workers.