DECTI Trade Seminar: Trade Liberalization, Labor Reforms and Formal-Informal Employment Dynamics

Speaker: Mariano Bosch, University of Alicante

Abstract: This paper studies gross worker flows to explain the rising informality in Brazilian metropolitan labor markets from 1983-2002. It first conceptually analyzes the likely effects of the dramatic labor market and trade reforms of the late 1980s in a search and matching context. It then estimates the impact of these factors on relative job flows and then the resultant increase in informality. We find that trade liberalization plays a very small role while the rise in firing costs and union power appear more important.

• Paper (pdf - 357k)