Wages and informality in developing countries

Arbeitspapier

It is often argued that informal labor markets in developing countries promote growth by reducing the impact of regulation. On the other hand informality may reduce the amount of social protection offered to workers. We extend the wage-posting framework of Burdett and Mortensen (1998) to allow heterogeneous firms to decide whether to locate in the formal or the informal sector, as well as set wages. Workers engage in both off the job and on the job search. We estimate the model using Brazilian micro data and evaluate the labo market and welfare effects of policies towards informality.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economic Growth Center Discussion Paper ; No. 1018

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Monopsony; Segmented Labor Markets ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: Informality ; Unemployment ; Job Search ; Wage Posting ; Equilibrium wage distributions ; On the Job Search ; Method of Moments ; Informality ; Unemployment ; Job Search ; Wage Posting ; Equilibrium wage distributions ; On the Job Search ; Method of Moments

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Meghir, Costas ; Narita, Renata ; Robin, Jean-Marc
• Event: Veröffentlichung
• (who): Yale University, Economic Growth Center
• (where): New Haven, CT
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/98211
• Last update: 10.03.2025, 11:43 AM CET