Firms, Informality, and Development: Theory and Evidence from Brazil
By Gabriel Ulyssea. The American Economic Review, 2018
407 citations recorded by the source corpus.
This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers “off the books,” the intensive margin. The model encompasses the main competing frameworks for understanding informality and provides a natural setting to infer their empirical relevance. The counterfactual analysis shows that once the intensive margin is accounted for, firm and labor informality need not move in the same direction as a result of policy changes. Lower informality can be, but is not necessarily associated with higher output, TFP, or welfare. (JEL D22, E26, H26, J46, O14, O17)
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/00d876acaaa562b0274f1d1f4d9ec938634e2ac2
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In Economics and Econometrics
Citations in the corpus
- Margins of labor market adjustment to trade (2019, unknown): “4 In 1987, nominal tariffs were high, but the degree of protection actually experienced by a given industry often deviated substantially from the nominal tariff rate due to i) a variety of non-tariff barriers such as suspended import licenses for many goods and ii) a system of “special customs regim”
- How Should Policy Responses to the COVID-19 Pandemic Differ in the Developing World? (2020, unknown): “Since skilled work is largely concentrated in the formal sector, and unskilled work in the informal sector, it is natural to model the two labor inputs as gross-substitutes in the aggregate (as in Ulyssea, 2018).”
- Informality: Causes and Consequences for Development (2020, methodology): “It accounts for between a third and two-thirds of economic activity, 20-80 percent of the labour force and an equally large share of firms in these countries (e.g. Schneider & Enste 2000, Perry et al. 2007, La Porta & Shleifer 2008, Ulyssea 2018).”
- Firms and the Decline in Earnings Inequality in Brazil (2017, unknown): “For example, Ulyssea (2014) and Meghir et al. (2015) study the effects of policies on Brazil’s formal and informal sector employment.”