This paper analyzes the cyclical properties of worker flows in Brazil and Mexico, two important developing countries with large unregulated or informalʺ sectors. It generates three stylized facts that are critical to the accurate modeling of the sector and which suggest the need to rethink the...

This paper examines the adjustment of developing country labor markets to macroeconomic shocks. It models as having two sectors: a formal salaried (tradable) sector that may or may not be affected by union or legislation induced wage rigidities, and an informal (nontradable) self-employment...