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A Literature Review on Trade and Informal Labour Markets in Developing Countries

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  • Laura Munro

Abstract

This report provides a summary of the literature on the relationship between trade and informality in developing countries, with an emphasis on the BRIICS. While main conclusions of the ILO and WTO (2009) literature review are highlighted, the report focuses on additional and more recent literature. The report investigates four key issues in the literature on trade and informal labour markets: (1) theoretical predictions for trade and informality; (2) how trade liberalisation affects informal labour markets; (3) how trade flows affect the informal economy; and (4) what implications informality has for trade and growth. The main conclusion from this review is that empirical evidence on the relationship between trade and informality is complex and context-specific. Several of the empirical analyses reviewed in this report suggest that this variation is due to country-specific characteristics (in particular, labour market rigidity, capital mobility, level of economic development and heterogeneity of the informal workforce). Variation can also be partly explained by the fact that different methodologies are used and different measures of informality are employed across studies.

Suggested Citation

  • Laura Munro, 2011. "A Literature Review on Trade and Informal Labour Markets in Developing Countries," OECD Trade Policy Papers 132, OECD Publishing.
  • Handle: RePEc:oec:traaab:132-en
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    File URL: http://dx.doi.org/10.1787/5kg3nh4xwxr0-en
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    Cited by:

    1. Abeer Elshennawy & Dirk Willenbockel, 2014. "Trade Liberalization and the Costs and Benefits of Informality an Intertemporal General Equilibrium Model for Egypt," Working Papers 888, Economic Research Forum, revised Dec 2014.
    2. Nihar Shembavnekar, 2015. "Tariff Liberalisation, Labour Market Flexibility and Employment: Evidence from India," Working Paper Series 8115, Department of Economics, University of Sussex.
    3. Matthew Embrey & Guillaume R. Frechette & Sevgi Yuksel, 2016. "Cooperation in the Finitely Repeated Prisoner's Dilemma," Working Paper Series 8616, Department of Economics, University of Sussex.
    4. Ghani,Syed Ejaz & Kerr,William Robert & Segura,Alex, 2015. "Informal tradables and the employment growth of Indian manufacturing," Policy Research Working Paper Series 7206, The World Bank.

    More about this item

    Keywords

    employment; inclusive growth; trade; wages;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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