A Literature Review on Trade and Informal Labour Markets in Developing Countries

Laura Munro

No 132, OECD Trade Policy Papers from OECD Publishing

Abstract: This report provides a summary of the literature on the relationship between trade and informality in developing countries, with an emphasis on the BRIICS. While main conclusions of the ILO and WTO (2009) literature review are highlighted, the report focuses on additional and more recent literature. The report investigates four key issues in the literature on trade and informal labour markets: (1) theoretical predictions for trade and informality; (2) how trade liberalisation affects informal labour markets; (3) how trade flows affect the informal economy; and (4) what implications informality has for trade and growth. The main conclusion from this review is that empirical evidence on the relationship between trade and informality is complex and context-specific. Several of the empirical analyses reviewed in this report suggest that this variation is due to country-specific characteristics (in particular, labour market rigidity, capital mobility, level of economic development and heterogeneity of the informal workforce). Variation can also be partly explained by the fact that different methodologies are used and different measures of informality are employed across studies.

Keywords: employment; inclusive growth; trade; wages (search for similar items in EconPapers)
JEL-codes: F16 (search for similar items in EconPapers)
Date: 2011-10-19
New Economics Papers: this item is included in nep-dev, nep-int, nep-iue, nep-lab and nep-lma
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:traaab:132-en

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