TY  - RPRT
        AU  - Almeida, Rita K.
AU  - Carneiro, Pedro
        TI  - Enforcement of Regulation, Informal Labor and Firm Performance
        PY  - 2005/Sep/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 1759
        UR  - https://www.iza.org/publications/dp1759
        AB  - This paper investigates how enforcement of labor regulation affects the firm's use of informal employment and its impact on firm performance. Using firm level data on informal employment and firm performance, and administrative data on enforcement of regulation at the city level, we show that in areas where law enforcement is stricter firms employ a smaller amount of informal employment. Furthermore, by reducing the firm's access to unregulated labor, stricter enforcement also decreases average wages, productivity and investment. Our results are robust to several specification changes, and to instrumenting enforcement with 1) measures of access of labor inspectors to firms and 2) measures of general law enforcement in the area where the firm is located.
        KW  - flexibility
KW  - informal sector
KW  - productivity
KW  - labor market regulation
KW  - labor demand
        ER  -