We examine the impact of economic deregulation on employer evasion of union-mandated "formal" wage-contracts in an import-competing industry. We show that, if the state maintains industrial employment despite import liberalisation, through cheaper credit to firms, then employer evasion will...

Increasing informality and inequality have been recognised as the two primary outcomes of the twenty-first century globalisation. With growing intensity of the two problems, the world seems to be returning to the nineteenth-century precarious conditions in the world of work. Absence of...