Working Papers, Department of Economics, Lund University
Government Effectiveness and Regional Variation in Informal Employment
Abstract: This paper analyses the role of government effectiveness
in the determination of informal employment. A theoretical model is
developed, in which local governance and worker skill level are assumed to
influence the decision of the worker whether to seek employment in the
formal or informal sector. The model is assessed empirically using data
from Brazil, where almost half of the urban labour force is employed
informally. The empirical analysis supports the predictions of the model
and suggests that informal employment is lower in regions with better
governance and higher average education.
Keywords: informal employment; government effectiveness; Latin America; Brazil; (follow links to similar papers)
JEL-Codes: J21; J24; O17; R23; (follow links to similar papers)
18 pages, October 26, 2010, Revised March 31, 2011
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- This paper is forthcoming as:
Jonasson, Erik, 'Government Effectiveness and Regional Variation in Informal Employment', Journal of Development Studies.
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