Search

Begin New Search Topic Informal Economy Political Geography South America

1. The Short-Term Labor Market Impact of Venezuelan Immigration in Peru

Author:
Celia P. Vera and Juan Pablo Jiménez
Publication Date:
10-2022
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Peru is the second-largest recipient of Venezuelans worldwide. We combine newly available data on Venezuelans living in Peru and the Peruvian Household Survey to assess the impact of Venezuelan migration on natives’ wages and employment. The initial regression analysis exploits the variation in supply shifts across education-experience groups over time. It indicates that immigration in Peru had no adverse impact on native wages. However, the paper highlights that in Peru immigrants and natives with similar education and experience are likely to work in different occupations. The subsequent analysis based on occupational clustering confirms the null effect on wages and indicates that a 20% increase in immigrants decreases formal employment by 6%. We do not find evidence for changes in employment composition toward informality so that migration operates through the extensive margin of employment. We report evidence in favor of immigrants being a close substitute to the least productive natives, suggesting that firms substitute native formal labor for low-cost immigrant informal labor.
Topic:
Education, Immigration, Labor Market, and Informal Economy
Political Geography:
South America, Venezuela, and Peru

2. Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies

Author:
Carlo Lombardo, Lucía Ramírez-Leira, and Leonardo Gasparini
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin America’s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We find evidence that the MW has a compression effect on the wage distribution of formal workers. The effect was particularly large during the 2000s, a decade of sustained growth and strong labor markets. In contrast, the effect seems to vanish in the 2010s, a decade of much weaker labor markets. We also find suggestive evidence of a lighthouse effect: the MW seems to have an equalizing effect also on the wage distribution of informal workers.
Topic:
Income Inequality, Economy, Labor Market, Minimum Wage, and Informal Economy
Political Geography:
South America and Latin America

3. Costs and Benefits of Trade Shocks: Evidence from Chilean Local Labor Markets

Author:
Andres Cesar, Guillermo Falcone, and Leonardo Gasparini
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We study Chile’s labor market responses to trade shocks during 1996-2006, exploiting spatial and time variations in trade exposure arising from initial differences in industry specialization across local labor markets and the evolution of shocks across industries. We take advantage of China’s supply and demand’s worldwide shocks to instrument for Chinese import competition and demand for Chilean exports. Our main finding is that increasing manufacturing import competition implied a significant rise in labor informality in more exposed local markets, especially among young and unskilled workers. These groups also suffered significant relative wage losses. Meanwhile, locations that benefited most from the increased demand for primary products experienced a relative increase in employment, particularly among young individuals, and reallocation from self-employment towards salaried jobs in the formal sector, along with relative wage gains among old-age workers. Interestingly, these areas experienced a smaller increase in tertiary education enrollment rates than less exposed areas.
Topic:
Employment, Trade, Labor Market, and Informal Economy
Political Geography:
South America and Chile

4. The Informal Competitor Next Door: The Business Impact on Formal Enterprises in the Metropolitan Region of Paraguay.

Author:
Michael J. Pisani
Publication Date:
03-2019
Content Type:
Special Report
Institution:
Centro de Análisis y Difusión de la Economía Paraguaya (CADEP)
Abstract:
The conflict of business interests between formal and informal sellers often goes unabated across the metropolitan region of Paraguay. Within Paraguay it is widely understood that the informal sector is large, important, and ubiquitous. Nearly everywhere one looks, some aspect of informality may be observed. In our daily routines we see street vendors, maids, food peddlers, work and repair shops, and the tiny neighborhood convenience stores all in abundance.
Topic:
Business, Economic Development, and Informal Economy
Political Geography:
South America and Paraguay

5. Understanding Productivity Levels, Dispersion and Growth in the Leather Shoe Industry: Effects of Size and Informality

Author:
Juan Cristóbal Birbuet and Carlos Gustavo Machicado
Publication Date:
08-2009
Content Type:
Working Paper
Institution:
Institute for Advanced Development Studies (INESAD)
Abstract:
In this case study performed on the industrial sub-sector of manufacture of leather shoes in Bolivia, we use the Hsieh and Klenow model (2008) to determine the differences between productivity of larger and formal companies and productivity of smaller and informal companies. Our results reveal that there are not many differences in terms of productivity among these types of companies. We think that informality is indeed the most important factor that contributes to this phenomenon. Apparently, the decrease in costs associated with informality compensates to some extend the economies of scale of formal companies with bigger dimensions and better technology. A notable fact in the shoe manufacturing industry is that it had experienced an atomization process in the last years. This trend is the consequence of a progressive creation of many small informal companies instead of the consolidation of this industry in medium and large formal companies. In a way, informality has contributed to this process. First, because it allows the survival of less productive companies that if they were not informal, they would have to bear costs that would not allow them to continue in business. Second, because informality creates strong incentives for employees to start their own business. In the other hand, many costs associated to formality discourage legally operating companies to employ more people, raise capital and growth.
Topic:
Economy, Industry, Productivity, and Informal Economy
Political Geography:
South America and Bolivia