This paper studies the impact of an increase in the enforcement of labor regulations on unemployment and inequality, using city level data from Brazil. We find that stricter enforcement (affecting the payment of mandated benefits to formal workers) leads to: higher unemployment, less income...

Enforcement of labor regulations in the formal sector may drive workers to informality because they increase the costs of formal labor. But better compliance with mandated benefits makes it attractive to be a formal employee. We show that, in locations with frequent inspections workers pay for...

Enforcement of labor regulations in the formal sector may drive workers to informality because they increase the costs of formal labor. But better compliance with mandated benefits makes it attractive to be a formal employee. We show that, in locations with frequent inspections workers pay for...

The frequency of labor inspections in Brazil increased in the late 1990s. In the years that followed, between 2003 and 2007, formal employment expanded significantly in the country. This paper examines whether these city-level changes in labor inspections could be a significant factor...

This paper revisits the question of how trade openness affects labor market outcomes in a developing country setting. We explore the fact that plants face varying degrees of exposure to global markets and to the enforcement of labor market regulations, and rely on Brazil's currency crisis in...

Several episodes of market-oriented reforms in developing countries have been accompanied by a significant rise in work outside of the formal economy. This paper investigates whether the impact of increased exposure to trade on formal employment is mediated by the strength of labour regulations....