Economic expansion and increase in labout market formality: A poaching approach

Carlos Corseuil and Miguel Foguel

Revista Brasileira de Economia - RBE, 2012, vol. 66, issue 2

Abstract: This paper investigates the relationship between economic expansion and the degree of formalization for the Brazilian labour market in the recent period. We present a theoretical framework that attempts to explain this relationship through the dynamics of firms hiring strategies. The main predictions are: the share of formal employment rises as the unemployment rate falls, and that the formal-informal wage gap increases, at least at the beginning of the economic expansion. In the empirical part, we use longitudinal microdata from a Brazilian household survey to check whether these two predictions are confirmed. To a large extent our results corroborate both predictions

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:fgv:epgrbe:v:66:y:2012:i:2:a:3870

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