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Informal work in a flexible labour market
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics, Uppsala Center for Fiscal Studies. Univ Naples Federico II, CSEF, Naples, Italy.
European Commiss, JRC, Via E Fermi 2749, I-21027 Ispra, VA, Italy..
Sch Adv Studies, IMT, Lucca, Italy..
2017 (English)In: Oxford Economic Papers, ISSN 0030-7653, E-ISSN 1464-3812, Vol. 69, no 1, 143-164 p.Article in journal (Refereed) Published
Abstract [en]

Informal employment is a pervasive and persistent feature of most developing and developed economies. Labour taxation and labour market regulations are deemed two major causes for operating in the informal sector. Using data from France, Italy, and Spain, we analyse gross job flows and gross worker flows in the formal and informal sectors in the presence of lenient employment protection legislation, and investigate the way traditional policy interventions may favour transitions from one sector to the other. We show that optimal outcomes in terms of reduction and formalisation of informal jobs across the three countries examined are achieved with the combination of lower payroll taxes for permanent contracts and higher inspection rate for firms operating in the informal sector. Coupling lower firing costs with more frequent labour inspections also reduces informality, but this comes at the cost of an increased ratio of temporary to total employment.

Place, publisher, year, edition, pages
OXFORD UNIV PRESS , 2017. Vol. 69, no 1, 143-164 p.
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-319867DOI: 10.1093/oep/gpw010ISI: 000397080900007OAI: oai:DiVA.org:uu-319867DiVA: diva2:1088639
Available from: 2017-04-13 Created: 2017-04-13 Last updated: 2017-04-13Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • Other style
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