Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176115 
Year of Publication: 
2014
Series/Report no.: 
Texto para discussão No. 632
Publisher: 
Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia, Rio de Janeiro
Abstract: 
This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers "off the books", the intensive margin. The model encompasses the main competing frameworks for understanding informality and provides a natural setting to infer their empirical relevance. The counterfactual analysis shows that once the intensive margin is accounted for, aggregate firm and labor informality need not move in the same direction as a result of policy changes. Lower informality can be, but is not necessarily associated to higher GDP, TFP or welfare.
JEL: 
O17
C54
O12
Document Type: 
Working Paper

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