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Informal Jobs and Trade Liberalisation in Argentina

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  • Montes-Rojas, G.
  • Acosta, P.

Abstract

Rapid trade liberalisation can exert profound effects on labour markets. Domestic firms, to sustain competitiveness for survival, could react through cutting labour benefits to achieve cost reductions. Alternatively, trade liberalisation may alter the industry composition of firms changing the aggregate formality rates. This paper studies the relationship between trade liberalisation and informality in Argentina. Using manufacturing industry-level data for 1992-2003, the results confirm the hypothesis that trade increases informality in industries that experience sudden foreign competition. This explains about a third of the increase in informality. Sectors with higher investment ratios are able to neutralize and reverse this effect.

Suggested Citation

  • Montes-Rojas, G. & Acosta, P., 2013. "Informal Jobs and Trade Liberalisation in Argentina," Working Papers 13/10, Department of Economics, City University London.
  • Handle: RePEc:cty:dpaper:13/10
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    File URL: http://openaccess.city.ac.uk/id/eprint/2924/1/13_10_City_WP-Acosta-MontesRojas2013.pdf
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    References listed on IDEAS

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    Cited by:

    1. Paz, Lourenço S., 2014. "The impacts of trade liberalization on informal labor markets: A theoretical and empirical evaluation of the Brazilian case," Journal of International Economics, Elsevier, vol. 92(2), pages 330-348.
    2. repec:spr:laecrv:v:27:y:2018:i:1:d:10.1186_s40503-018-0061-1 is not listed on IDEAS
    3. Guillermo Cruces & Guido Porto & Mariana Viollaz, 2018. "Trade liberalization and informality in Argentina: exploring the adjustment mechanisms," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 27(1), pages 1-29, December.
    4. Paz, Lourenco, 2012. "The effect of trade liberalization on payroll tax evasion and labor informality," MPRA Paper 39545, University Library of Munich, Germany.

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    Keywords

    informality; trade liberalization; Argentina;

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