This paper investigates how enforcement of labor regulation affects firm size and other firm characteristics in Brazil. The authors explore firm level data on employment, capital, and output, city level data for economic city characteristics and new administrative data measuring enforcement of...

The authors study the effect of enforcement of labor regulation in Brazil, an economy with a large informal sector and strict labor law. Enforcement affects mainly the degree of compliance with mandated benefits (severance pay, health, and safety) in the formal sector and the registration of...