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The Impact of Structural Reforms on Wages and Employment: The Case of Formal versus Informal Workers in Bolivia


  • Spatz, Julius


This paper seeks to contribute to the ongoing controversy on the distributional effects of structural reforms in developing countries. To this end, we set up a small-scale macroeconomic model of a dual economy to capture the transmission mechanisms through which the deregulation of product and factor markets, the liberalization of the trade and FDI regime, and the privatization of public companies impact on the distribution of employment and wages between the formal and the informal sector. We empirically test the implications of our theoretical model in a detailed case study on the structural reform process in Bolivia since 1985.

Suggested Citation

  • Spatz, Julius, 2003. "The Impact of Structural Reforms on Wages and Employment: The Case of Formal versus Informal Workers in Bolivia," Kiel Working Papers 1186, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1186

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    References listed on IDEAS

    1. Haskel, Jonathan & Sanchis, Amparo, 1995. "Privatisation and X-Inefficiency: A Bargaining Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 43(3), pages 301-321, September.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    3. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," IDB Publications (Working Papers) 3338, Inter-American Development Bank.
    4. Laszlo Goerke, 1998. "Privatization and efficiency wages," Journal of Economics, Springer, vol. 67(3), pages 243-264, October.
    5. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    6. World Bank, 2002. "World Development Indicators 2002," World Bank Publications, The World Bank, number 13921.
    7. Haskel, Jonathan & Szymanski, Stefan, 1993. "Privatization, Liberalization, Wages and Employment: Theory and Evidence for the UK," Economica, London School of Economics and Political Science, vol. 60(238), pages 161-181, May.
    8. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4293, Inter-American Development Bank, Research Department.
    9. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    10. Garino, Gaia & Martin, Christopher, 2000. "Efficiency wages and union-firm bargaining," Economics Letters, Elsevier, vol. 69(2), pages 181-185, November.
    11. Machado, Roberto & Morley, Samuel A. & Pettinato, Stefano, 1999. "Indexes of structural reform in Latin America," Series Históricas 12, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    12. Oaxaca, Ronald L. & Ransom, Michael R., 1994. "On discrimination and the decomposition of wage differentials," Journal of Econometrics, Elsevier, vol. 61(1), pages 5-21, March.
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    Cited by:

    1. Nicoletta Batini & Paul Levine & Emanuela Lotti & Bo Yang, 2011. "Informality, Frictions and Monetary Policy," School of Economics Discussion Papers 0711, School of Economics, University of Surrey.
    2. Nunnenkamp, Peter & Thiele, Rainer, 2004. "Strategien zur Bekämpfung der weltweiten Armut: Irrwege, Umwege und Auswege," Kiel Discussion Papers 407, Kiel Institute for the World Economy (IfW).
    3. Nicoletta Batini & Paul Levine & Emanuela Lotti, 2011. "The Costs and Benefits of Informality," School of Economics Discussion Papers 0211, School of Economics, University of Surrey.

    More about this item


    Structural Reforms; Informal Sector; Wages; Employment; Bolivia;

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General


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