ABSTRACT
This chapter explores why legal reforms that aimed to facilitate the formalization of informal workers have largely failed to influence vulnerable groups in developing countries. It focuses on victims of war in Colombia who were displaced from rural areas and were engaged in the informal economy upon arrival in the cities, most of them as street vendors, domestic workers and small-scale entrepreneurs. The chapter presents information on a mixed methods design, using quantitative as well as qualitative data. The quantitative data is based on a National Survey. This survey was conducted by the National Commission to follow up the policies for internally displaced persons with the National University CID. In Latin America, as well as many other developing countries, formalization has failed to foster development and welfare for vulnerable groups. Cultural values and social norms can influence people's lives to a much greater extent than formal institutions.
