Carneiro, Rafael Dix; Goldberg, Pinelopi K.; Meghir, Costas - 2021
. Heterogeneous firms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual … productivity gains from trade are understated when the informal sector is omitted. 3) Trade openness results in large welfare gains … welfare. 5) The effects of trade on wage inequality are reversed when the informal sector is incorporated in the analysis. 6 …