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Informal Work along the Business Cycle: Evidence from Argentina

Author

Listed:
  • Julien Albertini

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Arthur Poirier
  • Thepthida Sopraseuth

    (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique)

Abstract

We shed light on the driving forces behind unemployment fluctuations and short-run changes in the informality rate on the Argentine labor market. Using Argentine survey data, we measure worker flows between formal employment, informal employment, unemployment and non-participation. We propose a methodology to correct for the discontinuity of Argentine survey data and that is able to compute consistent time series of quarterly ins and outs of informal work. Using variance decompositions and counterfactual exercises, we show that the ins and outs of informal employment are key drivers of labor market fluctuations. In particular, outflows from unemployment to informal employment account for 37% of fluctuations in the unemployment rate. In addition, our analysis suggests that informality is: (i) a flexible sector that is used in recessionary periods as a buffer against income losses and (ii) a stepping stone towards formal employment. The observed large changes in the informality rate are well explained by the change in job mobility between the formal and informal sectors as well as variations in hirings from unemployment and non-participation in the informal sector.

Suggested Citation

  • Julien Albertini & Arthur Poirier & Thepthida Sopraseuth, 2019. "Informal Work along the Business Cycle: Evidence from Argentina," Working Papers halshs-02112004, HAL.
  • Handle: RePEc:hal:wpaper:halshs-02112004
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02112004
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    References listed on IDEAS

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    Cited by:

    1. Sébastien CARRERE & Matthieu CLEMENT & François COMBARNOUS & Gabriel KESSLER & Eric ROUGIER & Ariel WILKIS, 2022. "The middle class in Argentina: dynamics, characteristics and implications for public policies," Working Paper 83de5468-cd86-4702-a4a8-6, Agence française de développement.
    2. Julien Albertini & Arthur Poirier & Danilo R. Trupkin, 2019. "A Job Vacancy Rate for Argentina," Working Papers 1919, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    3. Abiodun O. Folawewo & Olusegun A. Orija, 2020. "Informal-formal workers' transition in Nigeria: A livelihood analysis," WIDER Working Paper Series wp-2020-146, World Institute for Development Economic Research (UNU-WIDER).
    4. Delaporte, Isaure & Peña, Werner, 2023. "The Dynamics of Labour Market Polarization in Chile: An Analysis of the Link Between Technical Change and Informality," GLO Discussion Paper Series 1262, Global Labor Organization (GLO).

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    More about this item

    Keywords

    worker flows; informality; unemployment; business cycle; emerging market;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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