Enforcement of labor regulation and informality

  title={Enforcement of labor regulation and informality},
  author={Rita Almeida and Pedro Gonçalves da Silva Carneiro},
Enforcement of Labor Regulation and Informality 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 mandated benefits by receiving lower wages. Wage rigidity prevents downward adjustment at the bottom of the wage distribution. As a result, lower paid… CONTINUE READING
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