Institutions and Labor Market Informality (Instituicoes E a Informalidade No Mercado De Trabalho)

Abstract

This paper aims to develop a model capable of reconciling some of the main institutional aspects relative to labor market informality. It is a two-sector, formal and informal, matching model that incorporates the main tradeoffs faced by workers and firms when deciding in which sector they are going to enter. The model presents an innovation that makes it more coherent with most stylized facts and recent empirical evidence. Policy simulation's results show that the model can be used to analyze the effects of several institutional changes over a great number of crucial variables of the Brazilian labor market.

Note: Downloadable document is in Portuguese.

Keywords: Informal Sector, Institutions, Labor Market

JEL Classification: J41, O17