Policies against informality in segmented labour markets: a general equilibrium analysis applied to Uruguay
In this paper we analyze the impact of some policies against informality on the labor market, poverty and income distribution in Uruguay, using a general equilibrium model that considers a dual labor market segmented by skill, and microsimulations. We simulate two sets of policies: payroll tax cuts and increased enforcement in the informal sector. Both sets of policies are effective in reducing informality. Payroll tax cuts on unskilled labor increase informality among medium-skilled workers, but in spite of that they are successful in reducing poverty and improving income distribution. Enforcement policies have a negative impact on wages, especially for unskilled workers. The net effect on poverty is two-sided: on the one hand this policy promotes an increase in poverty as a consequence of wages falling, but on the other hand poverty falls because the formal demand for labor increases.
|Date of creation:||Dec 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (598) 2410-6449
Fax: (598) 2410-6450
Web page: http://www.fcs.edu.uy/subcategoria.php?SubCatId=48&CatId=53
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ude:wpaper:0408. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Irene Musio)or (Héctor Pastori)
If references are entirely missing, you can add them using this form.