This paper investigates how enforcement of labor regulation affects the firm’s use of informal employment and its impact on firm performance. Using firm level data on informal employment and firm performance, and administrative data on enforcement of regulation at the city level, we show that...

In many economies, there is substantial economic activity in the informal sector, beyond the reach of government policy. Labor market policies, which by definition apply only to the formal sector, can have important spillover effects on the informal sector. The relative sizes of the informal and...

We model decisions with respect to formality or informality for entrepreneurs in a new industry for a developing economy. We show that informality allows a leader to explore, without significant sunk costs, the potential profitability of the industry; that is, informality may be a stepping...

This paper estimates the impact of registering for taxes on firm profits in Bolivia, the country with the highest levels of informality in Latin America. A new survey of micro and small firms enables us to control for a rich set of measures of owner ability and business motivations that can...

In this paper we use newly available individual-level data from the Longitudinal Survey of Italian Households to investigate the factors affecting female labour force participation after the birth of the first child. We focus on the effects of pre-marital job characteristics and find that...

The informal sector plays an important role in the functioning of labor markets in emerging economies. To characterize better this highly heterogeneous sector, we conduct a distributional analysis of the earnings gap between informal and formal employment in Brazil, Mexico and South Africa,...

This paper conducts a cohort analysis of labor participation in urban Mexico in recent decades. The rates analyzed are the labor force participation, the unemployment rate, and the employment shares of the formal and informal salaried sectors, as well as of self-employment. These rates are...

This paper provides new evidence on the wage gap between informal and formal salary workers in South Africa, Brazil and Mexico. We use rich datasets that allow us to define informality in a relatively comparable fashion across countries. We compute precise wage differentials by accounting for...

This paper analyzes the relationship between formal sector subcontracting and the evolution of the informal sector using nationally representative survey data of Indian manufacturing enterprises for the period 1995-2006. In these years of fast economic growth, subcontracting by formal...

This paper presents empirical evidence from household and firm survey data collected during 2009-2010 on the implementation of the 2008 Labor Contract Law and its effects on China's workers. The government and local labor bureaus have made substantial efforts to enforce the provisions of the new...