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Wages and Informality in Developing Countries



Type:   Article
Titre:   Wages and Informality in Developing Countries
Auteur(s):   Meghir, Costas - Economics department (Auteur)
Narita, Renata - Universidade de São Paulo (USP) (Auteur)
Robin, Jean-Marc (1961-...) - Département d'économie (Auteur)
In:   American Economic Review
Date de publication:   2015-04
Éditeur:   ÉTATS-UNIS  :  American Economic Association
Volume:   105
Numéro:   4
Pages:   1509-1546  p.
ISSN:   00028282
DOI:   10.1257/aer.20121110
Mots-clés:   [en] Equilibrium wage-posting model, Brazilian labor, Formal labor market
JEL:   E26,  J24,  J31,  J46,  O15,  017
Résumé:   [en] We develop an equilibrium wage-posting model with heterogeneous firms that decide to locate in the formal or the informal sector and workers who search randomly on and off the job. We estimate the model on Brazilian labor force survey data. In equilibrium, firms of equal productivity locate in different sectors, a fact observed in the data. Wages are characterized by compensating differentials. We show that tightening enforcement does not increase unemployment and increases wages, total output, and welfare by enabling better allocation of workers to higher productivity jobs and improving competition in the formal labor market.


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