Enforcement of regulation, informal labor and firm performance

Arbeitspapier

This paper investigates how enforcement of labor regulation affects the firm's use of informal labor and firm performance. Using firm level data on informal employment and firm performance, and administrative data on enforcement of regulation at the city level, we show that in areas where law enforcement is stricter firms employ a smaller amount of informal employment. Furthermore, by reducing the firm's access to unregulated labor, stricter enforcement is also associated with lower labor productivity. We control for different regional and firm characteristics, and we instrument enforcement with a measure of the access of labor inspectors to firms. Taken together, our findings suggest that increased access to labor flexibility significantly improves firm performance.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: cemmap working paper ; No. CWP02/06

Classification and Topics

• Classification: Wirtschaft ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: Informal Sector , Labor Markets , Regulation , Productivity ; Informeller Sektor ; Arbeitsnachfrage ; Arbeitsmarktpolitik ; Personalbeschaffung ; Brasilien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Almeida, Rita ; Carneiro, Pedro
• Event: Veröffentlichung
• (who): Centre for Microdata Methods and Practice (cemmap)
• (where): London
• (when): 2006

Further information

• DOI: doi:10.1920/wp.cem.2006.0206
• Handle: http://hdl.handle.net/10419/79385
• Last update: 10.03.2025, 11:45 AM CET