Labor enforcement and formal employment: The effects of communication and punishment

Arbeitspapier

We evaluate the effects of a large-scale enforcement intervention on formal labor flows. The initiative combined a communication component (an official letter/e-mail sent to registered employers) and a punishment component (face-to-face inspections). Using two identification strategies (regression discontinuity design - RDD and difference-in-differences - DiD) we isolate the effects of each component keeping the other constant. Results show that both components increased the formalization of previous informal workers but did not change regular, formal labor demand. Effects are observed only for the short run, indicating that employers reacted to each component in the aftermath of the intervention and then moved back to their usual compliance behavior.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Texto para Discussão ; No. 2977

Classification and Topics

• Classification: Wirtschaft ; Labor Standards: Public Policy ; Informal Labor Markets ; Public Administration; Public Sector Accounting and Audits
• Subject: enforcement intervention ; labor inspection ; formal employment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Foguel, Miguel Nathan ; Corseuil, Carlos Henrique
• Event: Veröffentlichung
• (who): Instituto de Pesquisa Econômica Aplicada (IPEA)
• (where): Brasília
• (when): 2024

Further information

• DOI: doi:10.38116/td2977-eng
• Last update: 10.03.2025, 11:43 AM CET