In Colombia, as in other economies, labor informality is a cause for concern. The country faces one of the highest informality rates in the region, which poses significant challenges due to the reasons and effects associated with this labor phenomenon. The related literature in the country has been mainly focused on studying the composition of this sector and determining how labor costs, the minimum wage and the characteristics of individuals positively affect informality, however, not enough has been done to determine whether informality is a forced choice (exclusion hypothesis) or a voluntary choice (exit hypothesis) of the worker. Using the Colombian Longitudinal Survey of the Universidad de los Andes (ELCA) for the years 2010, 2013 and 2016, an analysis of the income gaps of individuals is carried out in order to determine in which sections of the income distributions each hypothesis best fits. The results suggest that, although in some sections of the income distributions the gap is small, the hypothesis that best fits to the different income distributions sections is the exclusion hypothesis.
