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Informality and Aggregate Productivity: The Case of Mexico
Author:
Mr. Jorge A Alvarez 0000000404811396 https://isni.org/isni/0000000404811396 International Monetary Fund

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Cian Ruane
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Series:
IMF Working Papers
Volume/Issue:
Volume 2019: Issue 257
Language:
English
Publication Date:
27 Nov 2019
DOI:
https://doi.org/10.5089/9781513519920.001
ISBN:
9781513519920
ISSN:
1018-5941
Pages:
43
Keywords:
WP; informal firm; size distribution; profit function; firm's idiosyncratic productivity; incumbent firm; firm value function; unproductive firm; firms in Mexico; idiosyncratic productivity; Informal employment; Productivity; Wages; Public expenditure review; aggregate productivity impact; IMF working papers; policy reform; front matter page; Self-employment
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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We assess the aggregate productivity impact of distortions arising from labor regulations in Mexico and how they interact with informality. Using employment surveys and a firm-level economic census, we document a number of novel features about informal firms in Mexico. We then construct and estimate a model of heterogeneous firms and endogenous informality to study the micro and macro impacts from various policy reforms. Some reforms may have large impacts on informal employment but small impacts on aggregate productivity.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2019: Issue 257