Abstract We analyse the factors that affect the decision to find employment in the formal or informal sectors taking into account the fact that there is a rationing of formal sector jobs and hence a job queue to enter that sector. Using data from Colombia, we confirm that formal job rationing does exist and that it affects around 62 per cent of the workers that find themselves in the informal labour market. Further factors determining actively seeking formal employment include personal traits, the characteristics of human capital and of the household and the wage premiums associated with working in the formal sector. Copyright © 2017 John Wiley & Sons, Ltd.