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Author: Dennis Becker Publisher: ISBN: Category : Languages : en Pages : 310
Book Description
The dissertation explores the impact of trade liberalization on heterogeneous firms in the presence of informality. In the first paper, I investigate the role of the informal sector in the impact of trade liberalization on welfare, employment and wage inequality in a model of trade with heterogeneous firms. The findings suggest that trade liberalization reduces informal employment unambiguously. Contrary to the extant literature, however, its impact on welfare, total employment and wage inequality is country-specific. The second paper introduces product-level regulation as new driver of informality in a model of heterogeneous multi-product firms and endogenous product choice, where firms face regulation at both firm- and product-level and may comply with or evade either. The model suggests that firmlevel regulation causes informality by deterring firm registration. However, product-level regulation has two effects: it directly drives product informality within the formal sector as evasion of product regulation and indirectly deters firms from registering. When considering product-revenue distribution, formal firms are less diversified than informal firms, which implies that the formalization of economies may entail welfare loses due to decreased product diversity. The third paper studies trade liberalization, informality and corruption. Informality is commonly seen as response to regulations and weak institutions. Yet, regulatory changes, such as trade liberalization, and institutions interact, rendering their joint effect on formality ambiguous. I therefore study the impact of trade liberalization on firm formality in a model of heterogeneous firms and endogenous corruption. The model suggests that a higher entry cost to the formal sector, entailing more corruption, and trade liberalization decrease formality. However, as trade liberalization reduces corruption, the formal sector is less responsive to trade in economies with higher entry cost, hampering the selection effect of trade. An instrumental variable panel data analysis on Vietnamese SME surrounding Vietnam's WTO accession confirms the predictions.
Author: Dennis Becker Publisher: ISBN: Category : Languages : en Pages : 310
Book Description
The dissertation explores the impact of trade liberalization on heterogeneous firms in the presence of informality. In the first paper, I investigate the role of the informal sector in the impact of trade liberalization on welfare, employment and wage inequality in a model of trade with heterogeneous firms. The findings suggest that trade liberalization reduces informal employment unambiguously. Contrary to the extant literature, however, its impact on welfare, total employment and wage inequality is country-specific. The second paper introduces product-level regulation as new driver of informality in a model of heterogeneous multi-product firms and endogenous product choice, where firms face regulation at both firm- and product-level and may comply with or evade either. The model suggests that firmlevel regulation causes informality by deterring firm registration. However, product-level regulation has two effects: it directly drives product informality within the formal sector as evasion of product regulation and indirectly deters firms from registering. When considering product-revenue distribution, formal firms are less diversified than informal firms, which implies that the formalization of economies may entail welfare loses due to decreased product diversity. The third paper studies trade liberalization, informality and corruption. Informality is commonly seen as response to regulations and weak institutions. Yet, regulatory changes, such as trade liberalization, and institutions interact, rendering their joint effect on formality ambiguous. I therefore study the impact of trade liberalization on firm formality in a model of heterogeneous firms and endogenous corruption. The model suggests that a higher entry cost to the formal sector, entailing more corruption, and trade liberalization decrease formality. However, as trade liberalization reduces corruption, the formal sector is less responsive to trade in economies with higher entry cost, hampering the selection effect of trade. An instrumental variable panel data analysis on Vietnamese SME surrounding Vietnam's WTO accession confirms the predictions.
Author: Dennis Becker Publisher: ISBN: Category : Languages : en Pages : 50
Book Description
The informal sector is often seen as a coping mechanism for firms that choose to evade registration fees or pay low wages. In this paper, I investigate the role of the informal sector in the impact of trade liberalization on welfare, employment and wage inequality in a model of trade with heterogeneous firms. The findings suggest that trade liberalization reduces informal employment unambiguously. Contrary to the extant literature, however, its impact on welfare, total employment and wage inequality is country-specific.
Author: Jorge Alvarez Publisher: International Monetary Fund ISBN: 1513522329 Category : Business & Economics Languages : en Pages : 43
Book Description
We assess the aggregate productivity impact of distortions arising from labor regulations in Mexico and how they interact with informality. Using employment surveys and a firm-level economic census, we document a number of novel features about informal firms in Mexico. We then construct and estimate a model of heterogeneous firms and endogenous informality to study the micro and macro impacts from various policy reforms. Some reforms may have large impacts on informal employment but small impacts on aggregate productivity.
Author: Andrew B. Bernard Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization. When firms possess heterogeneous productivity, countries differ in relative factor abundance and industries vary in factor intensity, falling trade costs induce reallocations of resources both within and across industries and countries. These reallocations generate substantial job turnover in all sectors, spur relatively more creative destruction in comparative advantage industries than comparative disadvantage industries, and magnify ex ante comparative advantage to create additional welfare gains from trade. The relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices. In contrast with the neoclassical model, these price declines dampen and can even reverse the real wage losses of scarce factors as countries liberalize.
Author: Saibal Kar Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This paper provides an analysis of enforcement policies applicable to formal sector in dual labor markets, using a framework with heterogeneous firms, endogenous determination of informal wage, and politically dictated enforcement strategies. Firms that operate both in the formal and informal sectors do very little to increase employment when faced with the opportunity of hiring workers in the informal labor market. Thus enforcement of labor laws and other regulations should not have aggregate employment effects, particularly when workers are productively homogeneous. For firms operating exclusively in the informal sector, the outcome is different. Such features determine the stringency of enforcement in a market characterized by firms with varying levels of productivity. For example, in the case of firms with relatively high levels of productivity, enforcement has to be stricter than in the case with relatively low productivity firms. Taxing the more productive seems to be the optimal strategy.
Author: Rafael Dix-Carneiro Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous firms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual simulations to understand how trade affects economic outcomes in the presence of informality. We show that: (1) Trade openness unambiguously decreases informality in the tradable sector, but has ambiguous effects on aggregate informality. (2) The productivity gains from trade are understated when the informal sector is omitted. (3) Trade openness results in large welfare gains even when informality is repressed. (4) Repressing informality increases productivity, but at the expense of employment and welfare. (5) The effects of trade on wage inequality are reversed when the informal sector is incorporated in the analysis. (6) The informal sector works as an "unemployment," but not a "welfare buffer" in the event of negative economic shocks.
Author: William Francis Maloney Publisher: World Bank Publications ISBN: Category : Informal sector (Economics) Languages : en Pages : 32
Book Description
The author develops a view of the informal sector in developing countries primarily as an unregulated micro-entrepreneurial sector and not as a disadvantaged residual of segmented labor markets. Drawing on recent work from Latin America, he offers alternative explanations for many of the characteristics of the informal sector customarily regarded as evidence of its inferiority.
Author: Ana Maria Oviedo Publisher: World Bank Publications ISBN: 0821379976 Category : Political Science Languages : en Pages : 54
Book Description
This survey assembles recent theoretical and empirical advances in the literature on economic informality and analyzes the causes and costs of informality in developed and developing economies. Using recent evidence, the survey discusses the nature and roots of informal economic activity across countries, distinguishing between informality as the result of exclusion and exit. The survey provides an extensive review of recent international experience with policies aimed at reducing informality, in particular, policies that facilitate the formalization process, create a framework for the transition from informality to formality, lend support to newly created firms, reduce or eliminate inconsistencies across regulation and government agencies, increase information flows, and increase enforcement.
Author: Sebastian Galiani Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Informality is widespread in most developing countries. In Latin America, 50% of salaried employees work informally. Three stylized facts characterize informality: (1) small firms tend to operate informally while large firms tend to operate formally; (2) unskilled workers tend to be informal while skilled ones have formal jobs; (3) ceteris paribus, secondary workers (a worker other than the household head) are less likely to operate formally than primary workers. We develop a model that accounts for all these facts. In our model, both heterogeneous firms and workers have preferences over the sector they operate and choose optimally whether to function formally or informally. There are two labor markets, one formal and the other informal, and both firms and workers act unconstrained in them. By contrast, a prominent feature of the preexisting literature is that workers' decisions play no role in determining the equilibrium of the economy. In our model, policies that reduce the supply of workers in the informal labor market at given wages will increase the level of formality in the economy. This has noteworthy implications for the design of social programs in developing countries. We also show that an increase in the participation of secondary workers would tend to raise the level of informality in the economy.
Author: Dennis Becker
Author: Dennis Becker
Author: Dennis Becker
Author: Jorge Alvarez
Author: Andrew B. Bernard
Author: Saibal Kar
Author: Rafael Dix-Carneiro
Author: William Francis Maloney
Author: Dennis Becker
Author: Ana Maria Oviedo
Author: Sebastian Galiani