Informality and government enforcement in Latin America

Rodrigo Ceni Gonzalez

No 14-21, Documentos de Trabajo (working papers) from Instituto de Economía - IECON

Abstract: This paper analyzes how the informality responds to the quality of the labor enforcement and the bundle of benefits that the formal workers receive in different countries of Latin America. Countries with different levels of informality were compared, highlighting the features that could induce these different levels. In a general equilibrium framework, the government chooses a level of government enforcement and a bundle of benefits maximizing the workers' utility subject to a budget constraint, a representative firm chooses the share of workers in formality and informality that they want to hire, and the workers offer a share of time in formality and informality. I estimate the main parameters of the model, the production function, the quality of government enforcement and the quality of benefits, for five countries: Argentina, Brazil, Colombia, Peru and Uruguay. Differences in the quality functions of the government enforcement and benefits are found, as well as in the fines established to enforce the agents.

Keywords: Informality; labor regulation; enforcement; Latin America (search for similar items in EconPapers)
JEL-codes: E26 H26 H53 O17 O54 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2014-12
New Economics Papers: this item is included in nep-dge, nep-iue and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://hdl.handle.net/20.500.12008/7148

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Persistent link: https://EconPapers.repec.org/RePEc:ulr:wpaper:dt-21-14

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