Savings Under Formal and Informal Conditions

Abstract

This study analyzes different individual’s factors that impact savings conditions, based on two innovative surveys performed by the Inter-American Development Bank (IDB) for the cities of Lima and Mexico D.F. The aim of this research is fourfold: first, to understand how different individual’s conditions affect savings decisions; second, to identify particular individual characteristics that define different informal workers and their relationship with savings; third, to understand those factors that remain important beyond individual’s formal or informal characteristics; and forth, to consider some policy recommendations. Besides confirming some results found in previous studies about savings’ determinants, our research reveals the importance of how particular conditions of informal workers impact negatively on the likelihood of savings. Moreover, we found that beyond formal and informal conditions of workers there are other factors more related with the economic theory of self-confidence and motivation that impacts positively on savings decisions. These findings could have relevant extensions for policy recommendation to be taken into account.