The Determinants of Rising Informality in Brazil : Evidence from Gross Worker Flows
This paper studies gross worker flows to explain the rising informality in Brazilian metropolitan labor markets from 1983 to 2002. This period covers two economic cycles, several stabilization plans, a far-reaching trade liberalization, and change...
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| Language: | English |
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World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2007/10/8466542/determinants-rising-informality-brazil-evidence-gross-worker-flows http://hdl.handle.net/10986/7365 |
| Summary: | This paper studies gross worker flows to
explain the rising informality in Brazilian metropolitan
labor markets from 1983 to 2002. This period covers two
economic cycles, several stabilization plans, a far-reaching
trade liberalization, and changes in labor legislation
through the Constitutional reform of 1988. First, focusing
on cyclical patterns, the authors confirm that for Brazil,
the patterns of worker transitions between formality and
informality correspond primarily to the job-to-job dynamics
observed in the United States, and not to the traditional
idea of the informal queuing for jobs in a segmented market.
However, the analysis also confirms distinct cyclical
patterns of job finding and separation rates that lead to
the informal sector absorbing more labor during downturns.
Second, focusing on secular movements in gross flows and the
volatility of flows, the paper finds the rise in informality
to be driven primarily by a reduction in job finding rates
in the formal sector. A small fraction of this is driven by
trade liberalization, and the remainder seems driven by
rising labor costs and reduced flexibility arising from
Constitutional reform. |
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