Informal Work Along the Business Cycle: Evidence from Argentina

GATE Working Paper Series, WP 1916 - April 2019

45 Pages Posted: 16 May 2019

See all articles by Julien Albertini

Julien Albertini

University of Lyon 2

Arthur Poirier

affiliation not provided to SSRN

Thepthida Sopraseuth

Université du Maine; University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP)

Date Written: April 16, 2019

Abstract

We shed light on the driving forces behind unemployment fluctuations and short-run changes in the informality rate on the Argentine labor market. Using Argentine survey data, we measure worker flows between formal employment, informal employment, unemployment and non-participation. We propose a methodology to correct for the discontinuity of Argentine survey data and that is able to compute consistent time series of quarterly ins and outs of informal work. Using variance decompositions and counterfactual exercises, we show that the ins and outs of informal employment are key drivers of labor market fluctuations. In particular, outflows from unemployment to informal employment account for 37% of fluctuations in the unemployment rate. In addition, our analysis suggests that informality is: (i) a flexible sector that is used in recessionary periods as a buffer against income losses and (ii) a stepping stone towards formal employment. The observed large changes in the informality rate are well explained by the change in job mobility between the formal and informal sectors as well as variations in hirings from unemployment and non-participation in the informal sector.

Keywords: worker flows, informality, unemployment, business cycle, emerging market

JEL Classification: E24, E26, J6

Suggested Citation

Albertini, Julien and Poirier, Arthur and Sopraseuth, Thepthida, Informal Work Along the Business Cycle: Evidence from Argentina (April 16, 2019). GATE Working Paper Series, WP 1916 - April 2019. Available at SSRN: https://ssrn.com/abstract=3373045 or http://dx.doi.org/10.2139/ssrn.3373045

Julien Albertini (Contact Author)

University of Lyon 2 ( email )

Arthur Poirier

affiliation not provided to SSRN

Thepthida Sopraseuth

Université du Maine ( email )

72085 Le Mans Cedex 9
France

University of Angers - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP)

Ecole Normale Superieure
48 boulevard Jourdan
75014 Paris
France

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