IDEAS home Printed from https://ideas.repec.org/p/aqr/wpaper/201509.html
   My bibliography  Save this paper

“Determinants of Micro Firm Informality in Mexican States 2008-2012”

Author

Listed:
  • Antonio Baez-Morales

    (Department of Econometrics. University of Barcelona)

Abstract

Informality has been given adverse associations as a result of its economic and social consequences in developed and developing countries. The latter group of countries has been the most affected in terms of low productivity, unprotected workers and the erosion of institutional credibility. Although the determinants of informality have been studied before, the research conducted on micro firms in a developing country has been less notable. In this paper, Mexico is taken as case study due to its high level of micro firm informality and the heterogeneity among Mexican states. The aim of this paper is to analyse the determinants of micro firm informality by state, using different public sources, such as the Encuesta Nacional de Micronegocios (ENAMIN, or the National Micro Firm Survey), the Instituto Nacional de Estadisica (INEGI, or the National Institute for Statistics) and the Secretaría de Economía (SE, or the Secretariat for Economics). Econometric panel data models were estimated for a sample of 32 states over the 2008-2012 period. Furthermore, this paper uses different definitions of informality to check the robustness of the results. The empirical evidence obtained allows us to conclude that, although economic factors are the main causes of informality, variables such as corruption and education have an important role to play.

Suggested Citation

  • Antonio Baez-Morales, 2015. "“Determinants of Micro Firm Informality in Mexican States 2008-2012”," AQR Working Papers 201509, University of Barcelona, Regional Quantitative Analysis Group, revised Apr 2015.
    • Handle: RePEc:aqr:wpaper:201509
    as

    Download full text from publisher

    File URL: http://www.ub.edu/irea/working_papers/2015/201514.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Pagés, Carmen & Stampini, Marco, 2009. "No education, no good jobs? Evidence on the relationship between education and labor market segmentation," Journal of Comparative Economics, Elsevier, vol. 37(3), pages 387-401, September.
    2. Sean Dougherty & Octavio Escobar, 2013. "The Determinants of Informality in Mexico's States," OECD Economics Department Working Papers 1043, OECD Publishing.
    3. Andreas Buehn & Friedrich Schneider, 2012. "Shadow economies around the world: novel insights, accepted knowledge, and new estimates," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 139-171, February.
    4. Gatti, Roberta & Honorati, Maddalena, 2007. "Informality among Formal Firms: Firm-level, Cross-country Evidence on Tax Compliance and Access to Credit," CEPR Discussion Papers 6597, C.E.P.R. Discussion Papers.
    5. Áureo de Paula & Jose A. Scheinkman, 2010. "Value-Added Taxes, Chain Effects, and Informality," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 195-221, October.
    6. Baltagi, Badi H & Griffin, James M, 1984. "Short and Long Run Effects in Pooled Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(3), pages 631-645, October.
    7. Benno Torgler, 2005. "Tax morale in Latin America," Public Choice, Springer, vol. 122(1), pages 133-157, January.
    8. Michael J. Pisani & José A. Pagán, 2004. "Sectoral Selection and Informality: a Nicaraguan Case Study," Review of Development Economics, Wiley Blackwell, vol. 8(4), pages 541-556, November.
    9. Gemechu Ayana Aga & Barry Reilly, 2011. "Access to credit and informality among micro and small enterprises in Ethiopia," International Review of Applied Economics, Taylor & Francis Journals, vol. 25(3), pages 313-329.
    10. G. M.P. Swann, 2009. "The Economics of Innovation," Books, Edward Elgar Publishing, number 13211.
    11. Melanie Khamis, 2012. "A Note On Informality In The Labour Market," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(7), pages 894-908, October.
    12. Maloney, William F, 1999. "Does Informality Imply Segmentation in Urban Labor Markets? Evidence from Sectoral Transitions in Mexico," The World Bank Economic Review, World Bank, vol. 13(2), pages 275-302, May.
    13. Aureo de Paula & Jose A. Scheinkman, 2009. "“Value Added Taxes, Chain Effects and Informality†, Second Version," PIER Working Paper Archive 09-041, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 09 Nov 2009.
    14. Nicola Brandt, 2011. "Informality in Mexico," OECD Economics Department Working Papers 896, OECD Publishing.
    15. Masatlioglu Yusufcan & Rigolini Jamele, 2008. "Informality Traps," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-24, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ceyhun Elgin & Muhammed Burak Sezgin, 2017. "Sectoral Estimates of Informality: A New Method and Application for the Turkish Economy," The Developing Economies, Institute of Developing Economies, vol. 55(4), pages 261-289, December.
    2. Mandelman, Federico S. & Montes-Rojas, Gabriel V., 2009. "Is Self-employment and Micro-entrepreneurship a Desired Outcome?," World Development, Elsevier, vol. 37(12), pages 1914-1925, December.
    3. Cilasun, Seyit Mumin & Acar, Elif Oznur & Gunalp, Burak, 2015. "The Effects of Labor Market Reforms on the Labor Market Dynamics in Turkey," MPRA Paper 64767, University Library of Munich, Germany.
    4. Flórez, Luz A., 2017. "Informal sector under saving: A positive analysis of labour market policies," Labour Economics, Elsevier, vol. 44(C), pages 13-26.
    5. Shahen, Mostafa E. & Kotani, Koji & Kakinaka, Makoto & Managi, Shunsuke, 2020. "Wage and labor mobility between public, formal private and informal private sectors in a developing country," Economic Analysis and Policy, Elsevier, vol. 68(C), pages 101-113.
    6. Anita Staneva & G Arabsheibani, 2014. "Is there an informal employment wage premium? Evidence from Tajikistan," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-24, December.
    7. Hartmut Lehmann, 2015. "Informal Employment in Transition Countries: Empirical Evidence and Research Challenges," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 57(1), pages 1-30, March.
    8. Oksana Nezhyvenko, 2018. "Informal Employment in Ukraine and European Union Transition Countries," Erudite Ph.D Dissertations, Erudite, number ph18-03 edited by Philippe Adair, December.
    9. Posada, Carlos Esteban & Mejía, Daniel, 2012. "Informalidad : teoría e implicaciones de política," Chapters, in: Arango-Thomas, Luis Eduardo & Hamann-Salcedo, Franz Alonso (ed.), El mercado de trabajo en Colombia : hechos, tendencias e instituciones, chapter 9, pages 363-397, Banco de la Republica de Colombia.
    10. James Albrecht & Lucas Navarro & Susan Vroman, 2009. "The Effects of Labour Market Policies in an Economy with an Informal Sector," Economic Journal, Royal Economic Society, vol. 119(539), pages 1105-1129, July.
    11. Matteo Bobba & Luca Flabbi & Santiago Levy, 2022. "Labor Market Search, Informality, And Schooling Investments," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(1), pages 211-259, February.
    12. Edinson Tolentino Raymondi, 2021. "El papel de la formalidad en el acceso al crédito para las micro y pequeñas empresas," Revista de Análisis Económico y Financiero, Universidad de San Martín de Porres, vol. 4(02), pages 01-06.
    13. Lemos, Sara, 2009. "Minimum wage effects in a developing country," Labour Economics, Elsevier, vol. 16(2), pages 224-237, April.
    14. Joshi, Anuradha & Prichard, Wilson & Heady, Christopher, 2014. "Taxing the Informal Economy: The Current State of Knowledge and Agendas for Future Research," Working Papers 13663, Institute of Development Studies, International Centre for Tax and Development.
    15. Lehmann, Hartmut & Pignatti, Norberto, 2018. "Informal employment relationships and the labor market: Is there segmentation in Ukraine?," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 838-857.
    16. Hatem Jemmali & Fatma El-Hamidi, 2018. "Does it Still Pay to Go to College in Egypt? Decomposition Analysis of Wage Differentials For College and Non-College Graduates," Working Papers 1224, Economic Research Forum, revised 18 Sep 2018.
    17. Enrique Alaniz & Alma Espino & T.H. Gindling, 2019. "Self-employment and labour market dynamics of men and women in El Salvador and Nicaragua," WIDER Working Paper Series wp-2019-97, World Institute for Development Economic Research (UNU-WIDER).
    18. Bargain, Olivier & Etienne, Audrey & Melly, Blaise, 2021. "Informal pay gaps in good and bad times: Evidence from Russia," Journal of Comparative Economics, Elsevier, vol. 49(3), pages 693-714.
    19. Aterido, Reyes & Hallward-Driemeier, Mary & Pages, Carmen, 2011. "Does expanding health insurance beyond formal-sector workers encourage informality ? measuring the impact of Mexico's Seguro Popular," Policy Research Working Paper Series 5785, The World Bank.
    20. Luz Adriana Florez, 2015. "The Search and Matching Equilibrium in an Economy with an Informal Sector: A Positive Analysis of Labour Market Policies," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, August.

    More about this item

    Keywords

    Business surveys; microenterprises; informal economy; entrepreneurship; developing countries; institutions. JEL classification: E26; O17; L26;
    All these keywords.

    JEL classification:

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aqr:wpaper:201509. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibiana Barnadas (email available below). General contact details of provider: https://edirc.repec.org/data/aqrubes.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.