Informal workers and their valuation of personal information

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Abstract: Two co-existing explanations for the persistence of labor informality are exclusion and voluntary exit. In the latter, an unsolved task is the quantification of the informal workers’ willingness to remain unobserved. This study sheds light on this task by implementing a lab-in-the-field experiment with street vendors in Bogotá. They must fill a receipt with their national ID to get their full payment or forgo part of their earnings and opt for a payment method with an alternative identity validation that does not require their ID: a transfer to a digital wallet, revealing their phone number; or a photograph when receiving the payment, revealing their face. I find that the probability of forgoing money to conceal the ID is around 30%. Moreover, 9% of participants never agreed to reveal the ID (for six scenarios with different prices and alternative validation methods), whereas 61% always revealed their ID. Participants played as first movers in three trust games: with another vendor, a police officer, and a public officer. Trust in their in-group is negatively correlated with providing their ID for full payment. I interpret this finding as in-group trust being a substitute for trust in out-group exchanges requiring validation through personal information.


Asistencia presencial: Aula C2.03 Campus de Sevilla

Keywords: Informal economy, Lab-in-the-field, Street-vendors, Trust