Global Lecture Series, Fall 2020
Monday, October 26, 8:30PM-9:30PM (New Delhi)
Increasing the Cost of Informal Workers: Evidence from Mexico
Brenda Samaniego de la Parra
Assistant Professor (Economics)
University of California, Santa Cruz
Firms use informal work arrangements to sidestep various labor regulations and taxes. We estimate the effects of increasing the cost of informal employment on formal firms’ and workers’ outcomes. We create a novel dataset combining administrative records and household surveys, and exploit exogenous variation in the cost of informal jobs generated by over 600,000 random work-site inspections in Mexico. Increasing the cost of informal jobs leads to persistently lower employment growth, lower formal job creation, and higher formal and informal job destruction. For informal workers, inspections increase the probability of being formalized at the inspected firm, but also increase the probability of dissolving the informal match. Transitioning to a formal job due to an inspection increases the probability of being poached to a new, formal job and increases future wages. Our empirical findings are consistent with potential employers using formality status as a signal for workers’ productivity.
About the Speaker:
Brenda Samaniego de la Parra is an Assistant Professor of Economics at the University of California, Santa Cruz. Her research analyzes how different work arrangements between workers and firms arise, and their implications for the aggregate economy. She has published research in the International Labour Organization’s (ILO) World of Work and Global Employment Trends reports and has consulted for the ILO and the World Bank. Before joining the Economics Department at UC Santa Cruz, she was a Visiting Scholar at the Federal Reserve Bank of St. Louis and served as Special Projects Deputy Director for the National Banking and Securities Commission in Mexico. She received a PhD in economics from the University of Chicago, a B.S. in economics and a B.S. in political science from the Instituto Tecnológico Autónomo de México (ITAM).
Dr. Chitrakalpa Sen, Associate Professor (Economics), JGBS