It is widely believed that the presence of a large informal sector increases the efficiency costs of social programs in developing countries. We develop a simple theoretical model of optimal unemployment insurance (UI) that specifies the efficiency-insurance tradeoff in the presence of informal...

This paper examines whether increased import competition induces domestic workers to skill upgrade and/or switch industries. The analysis makes use of a large unique longitudinal matched employer-employee dataset that covers virtually all workers and firms in Portugal over the 1986-2000 period....