In Bogotá, Colombia, the problem of business informality is recurrent and growing every year. The mayor's office of Bogota has made efforts to implement policies and projects aimed at encouraging formalization. However, the number of businesses that are part of the so-called "Shadow Economy" seems to be more and more. The internal conflict in which Colombia has lived for the last 70 years has forced many people to leave their homes and move to the big cities. Many of these people were forced to find a means of subsistence, including opening micro and small businesses with their life savings. Formalization in the city of Bogota involves several procedures and expenses, which is why many people choose to remain hidden from the eyes of the authorities.
This study sought to find predictors of the phenomenon of informality in the city of Bogotá. A questionnaire was used to find the personal reasons why people decide not to become formalized. Likewise, we also sought to investigate possible demographic, social and business factors that may somehow influence informality in Bogota.
It was found that the image of the government is one of the most important factors influencing the formalization process. The high level of corruption in Colombia has led people not to trust the government and the public spending carried out by it. People prefer to remain informal to avoid paying taxes that will end up being wasted or stolen by politicians. On the other hand, the formalization process is perceived as inefficient, involving several procedures and expenses that only discourage people from formalizing. Likewise, the benefits of formalization do not compensate for the losses involved in the process.
The treatment that formalized people receive with respect to informal workers is not perceived as fair; in fact, many people believe that formalization brings them more problems than the fact of being informal. It was also found that people's economic environment influences their level of formalization.
In the statistical analysis, it was found that some characteristics of the businesses, such as their age or type of ownership, can be predictors of their level of formalization. Likewise, it was found that the educational factor has a strong influence on the knowledge of the duties of business owners.
This study recommends a reform of the formalization process in Colombia to make it fairer and equal for all, where all micro and small businesses have the same obligations. Stronger sanctions are recommended where applicable. Finally, it is recommended that the government make a great effort to improve its public image, since this is where the origin of informality lies.