EconPapers    
Economics at your fingertips  
 

Trade Liberalization and Informality in Argentina: Exploring the Adjustment Mechanisms

Guillermo Cruces, Guido Porto and Mariana Viollaz ()
Additional contact information
Guillermo Cruces: CEDLAS-FCE-UNLP, CONICET.
Guido Porto: FCE-UNLP

CEDLAS, Working Papers from CEDLAS, Universidad Nacional de La Plata

Abstract: This paper studies the link between trade reforms and labor informality in Argentina using a long time series spanning the 1980-2001 period. We explore cross-section mechanisms, that operate at the industry level, and time-series mechanisms, that operate at a general equilibrium level. We argue that firms can substitute formal with informal workers to smooth a negative trade shock. In this setting, industries exposed to larger tariffs cuts could experience increases in informality. In general equilibrium, there can be additional aggregate impacts in both manufacturing and non-traded sectors through workers reallocation between sectors, wage adjustments, and firm entry and exit. Using the cross-section variation of the data and an instrumental variable strategy we explore empirically the cross-section mechanisms. We find that reductions in industry tariffs increase labor informality, and the effect is differentially stronger in industries with a larger share of small size firms. Using the time-series variation of the data, we are able to identify some of the general equilibrium effects. We find that the fall in the average national tariff decreased aggregate informality in the manufacturing sector but increased it in the non-traded sector.

JEL-codes: F13 F14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int, nep-iue and nep-lam
Date: 2018-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
http://www.cedlas.econo.unlp.edu.ar/wp/wp-content/uploads/doc_cedlas229.pdf (application/pdf)

Related works:
Journal Article: Trade liberalization and informality in Argentina: exploring the adjustment mechanisms (2018) Downloads
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:dls:wpaper:0229

Access Statistics for this paper

More papers in CEDLAS, Working Papers from CEDLAS, Universidad Nacional de La Plata Contact information at EDIRC.
Bibliographic data for series maintained by Ana Pacheco ().

 
Page updated 2019-03-31
Handle: RePEc:dls:wpaper:0229