informality

Increasing the cost of informal employment raised formalisation rates for workers at formal firms. However, it also led to a large, persistent drop in firm size. There is a trade-off between higher formalisation rates for current employees and lower ...

Greater competition from improved roads that connected markets in Ethiopia increased the divide between firms in the formal and informal sectors.

Unemployment insurance (UI) in Senegal can provide significant welfare gains, but given high levels of informality and a lack of transparency about workers’ status, these gains depend on programme design. UI funded through payroll taxes is effective ...

Informality, compliance costs, and weak administrative capacity all constrain the effectiveness of VAT in lower-income countries. However, it is a crucial source of revenue that is better than the alternatives, so governments should focus on reforms ...

Evidence from Mauritius shows the consequences of losing a formal job in a labour market characterised by high rates of informal employment are significant. Unemployment benefits help mitigate these effects, while generating only small disincentive e...

Labour market power hinders development by suppressing wage employment and also fostering a dependence on self-employment that undermines the effectiveness of policies aiming to boost wages and wage employment

When eligible for unemployment benefits, workers and firms make strategic layoffs in the presence of informal labour markets

In Mexico, where formal jobs have low starting salaries which increase rapidly over time, temporary wage subsidies to young high school graduates lead to sustained formal employment gains