The Effect of Informal Employment and Corruption on Income Levels in Brazil

76 Pages Posted: 30 Aug 2014 Last revised: 20 Jan 2016

See all articles by Jamie Bologna Pavlik

Jamie Bologna Pavlik

Texas Tech University - Department of Agricultural and Applied Economics

Date Written: September 29, 2015

Abstract

This paper exploits a unique dataset on corruption and informal sector employment in 476 Brazilian municipalities to estimate whether corruption impacts GDP or income levels once variation in informal economic activity is taken into account. Overall, I find that higher levels of corruption and a larger informal economy are generally associated with poor economic outcomes. However, only the size of the informal economy has a statistically significant effect. This effect is robust to the inclusion of a variety of controls and fixed effects, as well as an instrumental variable analysis. Further, these effects are large in magnitude. For example, a one standard deviation increase in the share of total employees that are informally employed explains a decrease in GDP per-capita of about 18 percent.

Keywords: corruption, informal economy, income levels, growth

JEL Classification: D73, O17, O43

Suggested Citation

Bologna Pavlik, Jamie, The Effect of Informal Employment and Corruption on Income Levels in Brazil (September 29, 2015). Journal of Comparative Economics, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2489057 or http://dx.doi.org/10.2139/ssrn.2489057

Jamie Bologna Pavlik (Contact Author)

Texas Tech University - Department of Agricultural and Applied Economics ( email )

Suite 167, 2625 Memorial Circle
TTU Administration
Lubbock, TX 79409
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
201
Abstract Views
1,283
rank
210,726
PlumX Metrics