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Informality and Productivity

Author

Listed:
  • Arturo Anton

    (Centro de Investigación y Docencia Económicas (CIDE))

  • Rodolfo Gutierrez

    (Ministry of Finance, Mexico)

Abstract

We examine the role of productivity differences across countries to explain the negative relationship between GDP per capita and informality in the data. Through the lens of a formal-informal two-sector model, we find that differences in overall and sector-specific productivities replicate the relationship between informality and GDP per capita and may explain up to 40 percent of the differences in informality. The dispersion in overall productivity induces most of the variation in output per worker in the informal sector.

Suggested Citation

  • Arturo Anton & Rodolfo Gutierrez, 2016. "Informality and Productivity," Economics Bulletin, AccessEcon, vol. 36(1), pages 205-217.
    • Handle: RePEc:ebl:ecbull:eb-15-00034
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Informal sector; productivity; GDP per capita;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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