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Informality and Productivity in the Labor Market: Peru 1986 - 2001

Author

Listed:
  • Galdo, José
  • Saavedra-Chanduví, Jaime
  • Chong, Alberto E.

Abstract

Peru has one of the highest informality rates in Latin America, with almost 60 percent of the urban labor force working at the margins of labor market legislation or in microenterprises that lack basic labor market standards (Marcouiller, Ruiz de Castilla, and Woodruff, 1997). This paper identifies two factors that can explain the variation in informality rates in the 1990s. First, Peru experienced a steady increase in employment allocation in traditionally informal sectorsin particular, retail trade and transport. Second, there was a sharp increase in nonwage labor costs, despite a reduction in the average productivity of the economy. In addition, the paper illustrates the negative correlation between productivity and informality by evaluating the impacts of the PROJOVEN youth training program.

Suggested Citation

  • Galdo, José & Saavedra-Chanduví, Jaime & Chong, Alberto E., 2007. "Informality and Productivity in the Labor Market: Peru 1986 - 2001," IDB Publications (Working Papers) 1958, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:1958
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    Cited by:

    1. Nikita Céspedes Reynaga, 2020. "Crecer no es suficiente para reducir la informalidad," Capítulos de libros, in: Nikita Céspedes Reynaga & Norman V. Loayza & Nelson R. Ramírez Rondán (ed.), Crecimiento económico en el Perú: causas y consecuencias, edition 1, volume 1, chapter 6, pages 174-203, Universidad de San Martín de Porres.
    2. Chacaltana, Juan, 2016. "Peru, 2002-2012: growth, structural change and formalization," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    3. Cynthia A. Sanborn & Tania Ramirez & Veronica Hurtado, 2017. "Mining, political settlements and inclusive development in Peru," Global Development Institute Working Paper Series esid-079-17, GDI, The University of Manchester.
    4. Mario Tello, 2011. "Indicadores Del Sector Mype Informal En El Perú: Valor Agregado, Potencial Exportador, Capacidad De Formalizarse Y Requerimientos De Normas Técnicas Peruanas De Sus Productos," Documentos de Trabajo / Working Papers 2011-310, Departamento de Economía - Pontificia Universidad Católica del Perú.
    5. Hertog, Steffen, 2020. "Segmented market economies in the Arab world: the political economy of insider-outsider divisions," LSE Research Online Documents on Economics 103677, London School of Economics and Political Science, LSE Library.
    6. Luis J. Carranza & Angel Melguizo & David Tuesta, 2012. "Matching Contributions for Pensions in Colombia, Mexico, and Peru: Experiences and Prospects," Working Papers 1232, BBVA Bank, Economic Research Department.

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