Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34273
Authors: 
Almeida, Rita K.
Carneiro, Pedro
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers 3094
Abstract: 
This paper studies the impact of an increase in the enforcement of labor regulations on unemployment and inequality, using city level data from Brazil. We find that stricter enforcement (affecting the payment of mandated benefits to formal workers) leads to: higher unemployment, less income inequality, a higher proportion of formal employment, and a lower formal wage premium. Our results are consistent with a model where stricter enforcement causes a contraction in labor demand in the formal sector; and where workers value mandated benefits highly, so that there is an increase in the formal sector labor supply, an increase in the willingness to become unemployed to search for a formal sector job, and a decrease in labor supply to the informal sector.
Subjects: 
Enforcement
labor regulations
inequality
unemployment
informal sector
Document Type: 
Working Paper

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