Estimating the Effects of Formality on Mexican Informal Microfirms. A Joint Multivariate Approach

Sonia Di Giannatale, Gibrán Ramírez-Abarca () and Ricardo Smith ()
Additional contact information
Gibrán Ramírez-Abarca: Director, Department of Public Policies for Productivity, Secretaría de Hacienda y Crédito Público. Mexico City. Mexico.
Ricardo Smith: Adjunct professor of Economics, Department of Economics, CIDE. Mexico City. Mexico.

Economía Mexicana NUEVA ÉPOCA, 2013, vol. XXII, issue 4, Cierre de época (II), 441-463

Abstract: In this article we use a multivariate framework to estimate net profits and levels of capital and labor for informal Mexican microfirms had they been formal. We estimate a Roy model to simultaneously model three different microfirm responses conditional on the sector (formal or informal) choice. Responses include profits and levels of labor and capital to be used in each sector. Our results indicate that the formal counterfactuals of currently informal microfirms employ higher levels of labor and physical capital; yet, they do not earn higher profits.

Keywords: microfirm behavior; informal sector; Roy model; developing economies. (search for similar items in EconPapers)
JEL-codes: C3 D2 O12 O17 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.economiamexicana.cide.edu/num_anteriore ... natale_(441-463).pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:emc:ecomex:v:22:y:2013:i:4:p:441-463

Access Statistics for this article

Economía Mexicana NUEVA ÉPOCA is currently edited by Juan Rosellón

More articles in Economía Mexicana NUEVA ÉPOCA from CIDE, División de Economía Contact information at EDIRC.
Bibliographic data for series maintained by Ricardo Tiscareño ( this e-mail address is bad, please contact ).