Informal wages in an economy with active labor courts

Luis Araujo () and Vladimir Ponczek

No 294, Textos para discussão from FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil)

Abstract: In most developing countries, job regulations and the justice branch interfere on several aspects of labor contracts. Inspired by this fact, we build a model that explores the role of labor courts in the determination of the di¤erence between formal and informal wages. We show that the presence of active labor courts in an environment where labor relations are subject to asymmetries of information reproduces features documented by the empirical literature. The main implications of our model are tested using Brazilian data.

Date: 2012-09-12
New Economics Papers: this item is included in nep-iue
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:fgv:eesptd:294

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