Firm productivity, informality and labor market outcomes

Resumo

We develop a two-sector job search model in which formal and informal firms not only post contracts to attract workers but also choose how much to invest in order to elevate their productivity. This allows firms to adjust their investment decisions when faced with different labor market scenarios, which opens up a new channel through which policy interventions in the labor market may affect the overall performance of the economy. We provide some theoretical results regarding comparative statics which are crucial for describing the optimal behavior of firms in equilibrium as well as for nonparametric identification of sectoral production functions. We also simulate the equilibrium impact of three different policy interventions aimed at decreasing the size of the informal sector. Our simulations show that such policies are welfare and total output inducing. The magnitude of each these gains depends on how much these policies allow previously non-operating small formal firms to start producing, as well as imposing relevant costs to the largest informal firms.

Ficha do documento

Tipo

Dissertação

Ano

2020

Instituição

Fundação Getulio Vargas

Fonte

Repositório da FGV

Idioma

Inglês

Acesso

Não informado

Identificador

oai:repositorio.fgv.br:10438/29070

Temas

Economia

Palavras-chave

Job searchInformal sectorEndogenous productivityWage postingLabor marketModelos de buscaSetor informalProdutividade endógenaPostagem de saláriosMercado de trabalhoEconomiaSetor informal (Economia)SaláriosProdutividade industrial