Why do workers choose informal work arrangements? Evidence from Latin America

Using an anonymized online panel maintained by NetQuest, we are conducting a survey experiment to elicit workers' preferences for alternative work arrangements such as informal work and self-employment across 7 Latin American countries. The objective is to separate out whether workers opt for alternative work because it is desirable or because they misperceive the costs and benefits of formality. Our methodology builds on a rapidly growing literature using stated-preference survey experiments to learn about workers’ willingness to forgo higher pay in exchange for benefits and amenities such as flexible hours and remote work. In a stated-preference experiment, workers are presented with two hypothetical jobs—often anchored around their own work experiences—that are identical to each except for some aspect such as the contract type and provision of a benefit and a randomly assigned difference in pay. The choices that individuals make at different wage trade-offs can then be used to infer their willingness to pay for a certain job feature or benefit