Análisis empírico simultáneo de los beneficios y el tamaño óptimo de las microempresas informales: evidencia para México

Sonia Di Giannatale, Ricardo Smith Ramírez and Gibrán Ramírez Abarca

No DTE 429, Working Papers from CIDE, División de Economía

Abstract: In this article we use a joint framework to investigate the effects on profit and size of Mexican microfirms from moving from the informal to the formal sector of the economy. Our analysis uses a multivariate Roy model, which allows us to study simultaneously the interaction between the different decisions a microfirm owner must take. Since our model contains several latent variables, we use a Monte Carlo EM algorithm to circumvent multiple integration Our results indicate: (i) owner's education level is the key determinant of the sector in which the microfirm operates; (ii) for microfirms currently in the informal sector, optimal levels of labor and capital if working in the formal sector would be higher than those used in the informal one, but the profit would be lower; and (iii) currently, several types of incentives makes that individuals with low education and financial constraints find operating in the informal market more profitable that do it in the formal one.

Keywords: Mexican microfirms; informal sector; formal sector; multivariate Roy model (search for similar items in EconPapers)
JEL-codes: O17 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2008-08
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