6.3 Migration

Initial theories on informality and segmented labor markets emphasize the role of migration

and social capital (Harris and Todaro 1974; Calvó-Armengol and Jackson 2004; Piracha et al.

2013). Where indigenous migrants lack established social networks, they may struggle to find

formal employment. 25

We don’t find much support for this hypothesis either. Table IX shows results for a triple

interaction model estimating the differences in returns to education for indigenous, non-indigenous

migrants, and non-migrants. In this case, migrants are individuals who currently reside in a district

other than that of their birth. The results suggest that although indigenous individuals receive on

average a penalty for migrating (Indigenous*Migrated) relative to non-indigenous individuals, this

effect is not statistically significant for any level of education. The triple interaction term for

indigenous migrants with secondary education is negative; these individuals are more likely to find

formal employment if they migrate than non-indigenous workers. 26 Thus, the informality gap is

not driven by differences in migration between indigenous and non-indigenous individuals.

[Table IX]

To shed further light on the underlying mechanisms, we test for heterogeneous effects by Peruvian

geography, industry classification, rural versus urban locations, male versus female-headed


In general, migrants in Peru, both men and women, are relatively young, unmarried and

coming from the highland regions (Sánchez Aguilar 2015).


The converse may and is often true: migrants may move to areas where they have an

established social network that can facilitate the transition.


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