The Micro-Economics Policy Seminar (MEPS) will take place on Tuesday (October 27) at 11:00 am. Our speaker this week will be Jennifer Poole (American University) presenting “Connect and Protect: The Role of Trade, Technology, and Labor Policies on Informality”
Abstract: Several episodes of market-oriented reforms in developing countries have been accompanied by a significant rise in work outside of the formal economy. In addition, according to a large literature for the developed world, the rapid development of communications technologies is related to the polarization of the labor force. A growing body of literature has investigated whether these two effects on formal workers are mediated by the strength of labor enforcement. In this paper, we combine these three lines of research to consider the implications of rigid labor market policies on informality, in the aftermath of trade liberalization and technological progress. We hypothesize that strict labor policy may reinforce trends toward widening wage dispersion, job polarization, and contribute to rising informality, in part, as low-wage, low-skilled job opportunities in low-productivity formal establishments diminish. In our investigation, we employ data from the Brazilian decennial Census that provides a wealth of information on workers' demographic and employment characteristics, including job formality status. We also exploit quasi-exogenous changes in industry-level real exchange rates and advances in broadband internet technology to explore the likelihood of informality across Brazilian employers exposed to varying degrees of de facto labor regulations, as measured by Ministry of Labor inspections.
Seminars will be held on Zoom every Tuesday 11:00 am until noon. For the schedule, see cmepr.gmu.edu. Questions may be addressed to Professor John Earle (firstname.lastname@example.org).
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