The relationship between trade liberalization and informal activity has not received the attention, whether theoretical or empirical, that it may deserve. The conventional view posits that trade liberalization would cause a rise in informality. This paper uses three different data sets to assess...

Informal self-employment is a major source of employment in developing countries. Its cyclical behavior is important to our understanding of the functioning of LDC labor markets, but turns out to be surprisingly complex. We develop a flexible model with two sectors: a formal salaried (tradable)...