Labor Market Regulation and Informality
Developing countries are characterized by a high share of informal workers and several types of labor market regulation. We study the effects of the enforcement of this type of regulation on firm dynamics in Brazil, using different linked administrative data sets. Using a difference-in-differences design, we show that firms caught with informal workers experience a slowdown in their growth rates that last several years. Informal workers are present in firms of all sizes. Formal and informal workers exhibit almost identical observable characteristics.
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| Language: | English |
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Inter-American Development Bank
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| Subjects: | Small Business, Informal Economy, Labor Force, Regulation, Firms Dynamics, Labor Market, Emerging Market, Auditing, Economic Development, D21 - Firm Behavior: Theory, E26 - Informal Economy • Underground Economy, J46 - Informal Labor Markets, O17 - Formal and Informal Sectors • Shadow Economy • Institutional Arrangements, |
| Online Access: | http://dx.doi.org/10.18235/0004809 https://publications.iadb.org/en/labor-market-regulation-and-informality |
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