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The Impact of Bank Credit on Employment Formality in Uruguay

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  • Nestor Gandelman
  • Alejandro Rasteletti

Abstract

This paper examines the effect of bank credit on employment formalization in Uruguay. Using a difference-in-differences methodology proposed by Cata~o, Page´s and Rosales (2011), the paper finds that financial deepening decreases informality, especially in more financially dependent sectors. The effect is additionally found to be greater for women and younger workers. Despite the severe economic crisis and a sharp contraction of bank credit experienced by the economy in the period of analysis, no evidence is found that the effect of bank credit on employment formality has changed over time.

Suggested Citation

  • Nestor Gandelman & Alejandro Rasteletti, 2012. "The Impact of Bank Credit on Employment Formality in Uruguay," Research Department Publications 4778, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4778
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    References listed on IDEAS

    as
    1. D'Erasmo, Pablo N. & Moscoso Boedo, Hernan J., 2012. "Financial structure, informality and development," Journal of Monetary Economics, Elsevier, vol. 59(3), pages 286-302.
    2. Verbeek, Marno & Vella, Francis, 2005. "Estimating dynamic models from repeated cross-sections," Journal of Econometrics, Elsevier, vol. 127(1), pages 83-102, July.
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    4. Moffitt, Robert, 1993. "Identification and estimation of dynamic models with a time series of repeated cross-sections," Journal of Econometrics, Elsevier, vol. 59(1-2), pages 99-123, September.
    5. Luis Catão & Carmen Pagés & María Fernanda Rosales, 2009. "Financial Dependence, Formal Credit and Informal Jobs: New Evidence from Brazilian Household Data," IDB Publications (Working Papers) 1100, Inter-American Development Bank.
    6. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    7. Rafael La Porta & Andrei Shleifer, 2008. "The Unofficial Economy and Economic Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 39(2 (Fall)), pages 275-363.
    8. Francisca Antman & David J. McKenzie, 2007. "Earnings Mobility and Measurement Error: A Pseudo-Panel Approach," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 125-161.
    9. repec:hrv:faseco:33078210 is not listed on IDEAS
    10. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
    11. Gasparini Leonardo & Leonardo Tornaroli, 2009. "Labor Informality in Latin America and the Caribbean: Patterns and Trends from Household Survey Microdata," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE, September.
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    13. Ignacio Munyo, 2004. "The Determinants of Capital Structure: Evidence from an Economy without Stock Market," Econometric Society 2004 Latin American Meetings 267, Econometric Society.
    14. Adriana Cassoni, 2001. "Unemployment and precariousness of employment in Uruguay: who are the losers?," Documentos de Trabajo (working papers) 1601, Department of Economics - dECON.
    15. Luis Catão & Carmen Pagés & María Fernanda Rosales, 2009. "Financial Dependence, Formal Credit and Informal Jobs: New Evidence from Brazilian Household Data," IDB Publications (Working Papers) 1100, Inter-American Development Bank.
    16. Catão, Luis A. V. & Pagés, Carmen & Rosales, Maria Fernanda, 2009. "Financial Dependence, Formal Credit, and Informal Jobs: New Evidence from Brazilian Household Data," IZA Discussion Papers 4609, Institute for the Study of Labor (IZA).
    17. Julio de Brun & Eduardo Barbieri & Nestor Gandelman, 2002. "Investment Equations and Financial Restrictions at Firm Level: The Case of Uruguay," Research Department Publications 3155, Inter-American Development Bank, Research Department.
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    More about this item

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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