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Enforcement of Labour Regulation and the Labour Market Effects of Trade: Evidence from Brazil

Ponczek, V; Ulyssea, G; (2022) Enforcement of Labour Regulation and the Labour Market Effects of Trade: Evidence from Brazil. The Economic Journal , 132 (641) pp. 361-390. 10.1093/ej/ueab052. Green open access

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Abstract

How does enforcement of labour regulations shape the labour market effects of trade? We combine local economic shocks generated by the unilateral trade liberalisation in Brazil and enforcement variation across regions to show that regions with stricter enforcement observed: (i) lower informality; (ii) larger losses in overall employment; (iii) greater reductions in the number of formal plants. Regions with weaker enforcement experienced opposite effects. All these effects are concentrated on low-skill workers. Our results indicate that greater flexibility introduced by informality allows both formal firms and low-skill workers to cope better with adverse labour market shocks.

Type: Article
Title: Enforcement of Labour Regulation and the Labour Market Effects of Trade: Evidence from Brazil
Open access status: An open access version is available from UCL Discovery
DOI: 10.1093/ej/ueab052
Publisher version: https://doi.org/10.1093/ej/ueab052
Language: English
Additional information: Copyright © The Author(s) 2021. Published by Oxford University Press on behalf of Royal Economic Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs licence (http://creativecommons.org/licenses/by-nc-nd/4.0/), which permits non-commercial reproduction and distribution of the work, in any medium, provided the original work is not altered or transformed in any way, and that the work is properly cited.
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10130712
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