TY  - RPRT
        AU  - Almeida, Rita K.
AU  - Carneiro, Pedro
        TI  - Inequality and Employment in a Dual Economy: Enforcement of Labor Regulation in Brazil
        PY  - 2007/Oct/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 3094
        UR  - https://www.iza.org/publications/dp3094
        AB  - 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.
        KW  - unemployment
KW  - inequality
KW  - labor regulations
KW  - enforcement
KW  - informal sector
        ER  -