Wages and Informality in Developing Countries

Costas Meghir, Renata Narita and Jean-Marc Robin

No 18347, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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 labor market and welfare effects of policies towards informality.

JEL-codes: J24 J3 J42 J6 O17 (search for similar items in EconPapers)
Date: 2012-08
New Economics Papers: this item is included in nep-dev, nep-dge, nep-iue, nep-lab, nep-lam, nep-lma and nep-ltv
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Citations: View citations in EconPapers (63)

Published as Costas Meghir & Renata Narita & Jean-Marc Robin, 2015. "Wages and Informality in Developing Countries," American Economic Review, American Economic Association, vol. 105(4), pages 1509-46, April.

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Related works:
Journal Article: Wages and Informality in Developing Countries (2015)
Working Paper: Wages and Informality in Developing Countries (2015)
Working Paper: Wages and Informality in Developing Countries (2015)
Working Paper: Wages and informality in developing countries (2013)
Working Paper: Wages and informality in developing countries (2013)
Working Paper: Wages and Informality in Developing Countries (2013)
Working Paper: Wages and Informality in Developing Countries (2012)
Working Paper: Wages and Informality in Developing Countries (2012)
Working Paper: Wages and Informality in Developing Countries (2012)
Working Paper: Wages and Informality in Developing Countries (2012)
Working Paper: Wages and informality in developing countries (2012)
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