Informal self-employment and macroeconomic fluctuations

Self-employment and business cycle persistence: Does the composition of employment matter for economic recoveries?

“…The parameter a S is centered at 0.60 for the benchmark economy and varies between 0.54 and 0.63 to generate steady-state self-employment shares ranging from 6.6 percent of the labor force to 79 percent of the labor 32 There are no plausible parameter values for the self-employment productivity process that yield the cyclicality of entry into self-employment (or the cyclicality of self-employment) in the model with exogenous entry into selfemployment. 33 The correlation between a S in the model and the index of Law and Order from Political Risk Services is 0.55 and significant at the 1 percent level, while the correlation between a S and Rule of Law from the World Bank's Worldwide Governance Indicators is 0.63 and significant at the 1 percent level as well. The correlation between the self-employment share in the data and Law and Order (Rule of Law) is -0.62 (-0.68) and significant at the 1 percent level.…”

“…I interpret changes in this parameter as differences in the quality of institutions, which have been shown to be important for cross-country differences in self-employment rates (see, for example, Loayza and Rigolini, 2011). 33 Figure 2 shows the steady-state relationship between self-employment and other model variables traced out by variations in the institutional quality parameter a S , holding other model parameters fixed. The parameter a S is centered at 0.60 for the benchmark economy and varies between 0.54 and 0.63 to generate steady-state self-employment shares ranging from 6.6 percent of the labor force to 79 percent of the labor 32 There are no plausible parameter values for the self-employment productivity process that yield the cyclicality of entry into self-employment (or the cyclicality of self-employment) in the model with exogenous entry into selfemployment.…”

An ARDL model of unrecorded and recorded economies in Turkey

“…However, Fiess et al (2008) also showed that in numerous Latin American countries, informal employment behaves procyclically across some periods. Similarly, Bosch and Maloney (2008) found that in Brazil and Mexico, the "flows from formality into informality are not countercyclical, but, if anything, pro-cyclical".…”

“…The literature on the UE over the business cycle has often concentrated on the analysis of informal employment Maloney, 2005, 2008;Loayza and Rigolini, 2006;Fiess et al 2008).…”

Informal Labour and Credit Markets: A Survey

“…Fiess et al (2006) and Loyaza and Rigolini (2006) in favor of, both, the segmented and the voluntary view of the informal sector depending on the origin of the shock and the presence of wage rigidities in the formal labour market.…”