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Trade Liberalisation and Informality: New stylized facts

  • Norbert Fiess
  • Marco Fugazza

The relationship between trade liberalisation and informal activity has not received the attention, whether theoretical or empirical, that it may deserve. The conventional view poses that trade liberalisation would cause a rise in informality. This paper uses three different data sets to assess the sign of the relationship. Empirical results provide a mixed picture. Macro founded data tend to produce results supporting the conventional view. Micro founded data do not. Empirical results also suggest that while informal output increases with deeper trade liberalisation, informal employment falls.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2008_34.

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Date of creation: Dec 2008
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Handle: RePEc:gla:glaewp:2008_34
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