View metadata
| dc.title | (In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico |
| dc.contributor.author | Busso, Matías |
| dc.contributor.author | Fazio, Maria Victoria |
| dc.contributor.author | Levy Algazi, Santiago |
| dc.contributor.orgunit | Department of Research and Chief Economist |
| dc.coverage | Mexico |
| dc.date.available | 2012-08-17T00:00:00 |
| dc.date.issue | 2012-08-10T00:00:00 |
| dc.description.abstract | The laws that regulate relations between firms and workers in Mexico distinguish sharply between salaried and non-salaried workers, and they are at the root of the existence of informality. This paper provides a clear definition of informality, distinguishing it from illegality. Using Mexico's Economic Census, the paper shows that the majority of firms are informal but legal, that there are more small formal firms than large ones, and that some large firms are informal. It also shows that informality and illegality increased in the period 1998-2008. Using a simple model of monopolistic competition to measure the productivity losses due to distortions that misallocate resources, the paper finds that one peso of capital and labor allocated to formal and legal firms is worth 28 percent more than if allocated to illegal and informal firms, and 50 percent more than if allocated to legal and informal firms. The paper concludes arguing that the distortions in the labor market created by informality reduce total factor productivity. |
| dc.format.extent | 56 |
| dc.identifier.doi | http://dx.doi.org/10.18235/0011401 |
| dc.identifier.url | https://publications.iadb.org/publications/english/document/(In)Formal-and-(Un)Productive-The-Productivity-Costs-of-Excessive-Informality-in-Mexico.pdf |
| dc.language.iso | en |
| dc.medium | Adobe PDF |
| dc.publisher | Inter-American Development Bank |
| dc.subject | Labor Policy |
| dc.subject | Productivity |
| dc.subject.jelcode | D24 - Production • Cost • Capital • Capital, Total Factor, and Multifactor Productivity • Capacity |
| dc.subject.jelcode | L25 - Firm Performance: Size, Diversification, and Scope |
| dc.subject.jelcode | O47 - Empirical Studies of Economic Growth • Aggregate Productivity • Cross-Country Output Convergence |
| dc.subject.keywords | Total factor productivity, Informality, Distortions, Misallocation costs, |
| dc.type | Working Papers |
| idb.identifier.pubnumber | Working Papers |
| idb.operation | BK-C1102 |