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Is the Informal Sector Politically Different? (Null) Answers from Latin America

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  • Baker, Andy
  • Velasco-Guachalla, Vania Ximena

Abstract

Scholars have produced a limited understanding of the effect of informal labor status on a worker’s political attitudes and behavior. We present descriptive evidence on the micropolitical correlates of informality using direct measures of the concept in public opinion surveys from 18 Latin American countries. We test three scholarly impressions of informal workers—that they are less politically engaged, more right-leaning, and more favorable toward noncontributory social programs than formal-sector workers. These are grounded in a dualist conception of labor markets that views the formal and informal sectors as having little overlap. We find minimal evidence for these impressions and argue that recent empirical findings consistent with a revisionist view of informality better account for our null results. According to this view, informal and formal labor markets are highly integrated, which, we argue, melds together the economic interests and political preferences of individuals in both sectors. We also provide evidence that casts doubt on alternative explanations that would attribute our null results to the timing of our surveys, to arational sources of political behavior, or to measurement error.

Suggested Citation

  • Baker, Andy & Velasco-Guachalla, Vania Ximena, 2018. "Is the Informal Sector Politically Different? (Null) Answers from Latin America," World Development, Elsevier, vol. 102(C), pages 170-182.
  • Handle: RePEc:eee:wdevel:v:102:y:2018:i:c:p:170-182
    DOI: 10.1016/j.worlddev.2017.09.014
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    2. Zhao, Nan & Liu, Xiaojie & Zhang, Zizhe, 2022. "Does competition from the informal sector affect firms’ energy intensity? Evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 130-142.
    3. Kanbur, Ravi & Ronconi, Lucas & López-Cariboni, Santiago, 2020. "Who demands labour (de)regulation in the developing world? Insider–outsider theory revisited," CEPR Discussion Papers 14277, C.E.P.R. Discussion Papers.
    4. Luca Zanin, 2021. "On the estimation of Okun’s coefficient in some countries in Latin America: a comparison between OLS and GME estimators," Empirical Economics, Springer, vol. 60(3), pages 1575-1592, March.
    5. Grossman, Shelby & C. Holland, Alisha, 2023. "The collusion trap: Theory with evidence from informal markets in Lagos, Nigeria," World Development, Elsevier, vol. 167(C).
    6. Wei‐Ting Yen, 2022. "Shaky social insurance foundation: Income instability and pension participation in South Korea," Social Science Quarterly, Southwestern Social Science Association, vol. 103(3), pages 494-508, May.
    7. Lucas RONCONI & Ravi KANBUR & Santiago LÓPEZ‐CARIBONI, 2023. "Who demands labour (de)regulation in the developing world? Revisiting the insider–outsider theory," International Labour Review, International Labour Organization, vol. 162(2), pages 223-243, June.

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