The market is a place where people behave quite relentlessly. If one person is selling a particular commodity at a higher price than others, no one will buy that commodity from him, however virtuous or merciful he is known to be. Of course, the actual world does not always work exactly in this...

Informal contacts are extensively used by both firms and workers to find jobs and fill vacancies. The common wisdom in the economic literature is that jobs created through this channel are of better quality and pay higher wages than jobs created through formal methods. This paper explores the...

This paper studies the impact of NAFTA on informality and real wages in Mexico. Using a dynamic industry model with firm heterogeneity, it is predicted that import tariff elimination could reduce the incidence of informality by making more profitable to some firms to enter the formal sector,...