IMPOSTO SOBRE TRABALHO E SEU IMPACTO NOS MERCADOS DE TRABALHO FORMAL E INFORMAL

This paper aims to analyze the effects of payroll taxes on the determination of the degree of informality and the main indicators of the Brazilian labor market, considering both aggregate and disaggregate indicators by qualification level. For that purpose, a two- sector model is developed, where firms of both sectors use qualified and non-qualified workers as inputs for production. The demand for labor is determined by workers' productivity while the supply side is represented by wage curves, which are specific to each sector and qualification group. The results show that reducing payroll taxes has a significant effect over the formality degree and increases both employment level and earnings.

An exploratory analysis of the effects of the formalisation policy for individual micro-entrepreneurs

This paper presents an exploratory analysis of the potential impacts of the Lei do Empreendedor Individual (Individual Entrepreneur Law). We intend to present evidence that helps clarify, albeit only partially, whether the policy was successful in promoting: i) micro-entrepreneurship in Brazil; and ii) the formalisation of entrepreneurs. Regarding the promotion of micro-entrepreneurship, there is evidence that the policy may have achieved this particular goal. It is worth noting, however, that the evidence in this study suggests that larger businesses could be reducing their scale in order to fit within the programme requirements, as well as there being a possibility that certain companies, particularly smaller ones, might be using the programme to change their working relationships with their employees, from wage-earning work to services rendered. The policy seems to have had a positive effect on the formalisation of individual entrepreneurs in terms of social security contributions, but not in the rate of registration in the National Register of Legal Entities (CNPJ)

SISTEMA BRASILEIRO DE FINANCIAMENTO À EDUCAÇÃO BÁSICA: PRINCIPAIS CARACTERÍSTICAS, LIMITAÇÕES E ALTERNATIVAS

Education is fundamental for social and economic development and school finance is one of the main features of an educational system. Assuming that a greater amount of resources brings more school quality, one can say that an "appropriate" primary and secondary school finance system should guarantee: (i) a satisfactory level of resources per pupil in each educational level; and (ii) equal opportunities for all students. This paper aims to analyze in what extent the actual system, particularly the Fundef, it is well succeeded in accomplishing these objectives, determining its main characteristics and limitations. The results suggest that although Fundef promoted a better resource distribution in the northern and northeastern regions, when considering the whole country the final result is negative. Besides that, when projecting future enrolment, two out of three scenarios indicate that Fundef distortions are worsened. Considering that, we also analyze the possible impacts of school finance centralization, including redistributive impacts among state, state's capital and other municipalities.

Local Labor Market Conditions and Crime: Evidence from the Brazilian Trade Liberalization

This paper estimates the effect of local labor market conditions on crime in a developing country with high crime rates. Contrary to the previous literature, which has focused exclusively on developed countries with relatively low crime rates, we find that labor market conditions have a strong effect on homicides. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local labor demand. Regions facing more negative shocks experience large relative increases in crime rates in the medium term, but these effects virtually disappear in the long term. This pattern mirrors the labor market responses to the trade shocks. Using the trade liberalization episode to design an instrumental variables strategy, we find that a 10% reduction in expected labor market earnings (employment rate × earnings) leads to a 39% increase in homicide rates. Our results highlight an additional dimension of adjustment costs following trade shocks that has so far been overlooked in the literature

Firms, informality, and development: theory and evidence from Brazil

This paper develops and estimates an equilibrium model where heterogeneous firms can exploit two margins of informality: (i) not register their business, the extensive margin; and (ii) hire workers "off the books," the intensive margin. The model encompasses the main competing frameworks for understanding informality and provides a natural setting to infer their empirical relevance. The counterfactual analysis shows that once the intensive margin is accounted for, firm and labor informality need not move in the same direction as a result of policy changes. Lower informality can be, but is not necessarily associated with higher output, TFP, or welfare

The formal-informal labor market segmentation hypothesis revisited

Despite the existence of a large empirical literature, there is no conclusive answer to whether labor markets in developing countries are segmented. Moreover, a prior and perhaps more fundamental question remains largely unanswered, namely, whether the formal-informal segmentation hypothesis actually has empirical content. This paper tackles the latter question by developing a stochastic dynamic discrete choice model to analyze workers' choices between unemployment, formal and informal jobs. This general framework is then used to assess the empirical implications of dierent models of labor market functioning. As a complete taxonomy exercise is beyond the scope of this paper, I focus on the two most polar cases in the present context: the fully integrated and fully segmented labor markets. The nal goal is to analyze to which extent these two extreme benchmarks can generate implications that are empirically distinguishable and, more broadly, whether the ndings in the empirical literature can be supported by a single model or by a broad array of models. The analysis shows that both models can support the observed regularities regarding formal-informal wage gaps, transitions and job duration. Hence, it does not seem possible to identify the existence of segmentation from the moments typically analyzed in the empirical literature

Instituições e a informalidade no mercado de trabalho

This paper aims to develop a model capable of reconciling some of the main institutional aspects relative to labor market informality. It is a two-sector, formal and informal, matching model that incorporates the main tradeoffs faced by workers and firms when deciding in which sector they will operate. The model presents an innovation that makes it more coherent with most stylized facts and recent empirical evidence. Policy simulation's results show that increasing unemployment benefits and reducing payroll taxes generate positive, although small effects over labor market indicators. However, intensifying government audition rates implies a substantial reduction of informality rates, but it also causes unemployment to increase and the deterioration of other important indicators in the Brazilian labor market.O objetivo deste artigo é desenvolver um modelo que concilie os principais aspectos institucionais relativos à informalidade no mercado de trabalho. Trata-se de um modelo de matching com dois setores, formal e informal, que incorpora os principais tradeoffs que firmas e trabalhadores enfrentam ao decidir em que setor ingressar. O modelo apresenta uma inovação que o torna mais coerente aos principais fatos estilizados e às evidências empíricas mais recentes. Os resultados das simulações de políticas mostram que elevações no seguro-desemprego e reduções no imposto sobre a folha geram impactos positivos, porém reduzidos, sobre os principais indicadores do mercado de trabalho. Ao contrário, uma intensificação da fiscalização governamental leva a significativas reduções da informalidade, mas também provoca uma elevação substancial da taxa de desemprego e uma piora em outros indicadores do mercado de trabalho brasileiro

On the empirical content of the formal-informal labor market segmentation hypothesis

To date, the empirical literature on the formal-informal labor market segmentation hypothesis has largely focused on the analysis of wage determination in both sectors. The underlying premise in this literature is that, under segmentation, equally productive workers receive higher wages if located in the formal sector. Thus, identifying the existence of wage differentials between equally productive workers would imply that the labor market is segmented. The objective of this paper is to examine the extent to which the premise behind this literature actually has empirical content, and whether or not one can actually identify the existence of segmentation by analyzing wage data alone. For that, we develop a simple framework to describe the main determinants of the cross-sectional wage distributions in both sectors. We show that the evidence can be supported by completely different models of labor market functioning. It thus seems unlikely that one can actually identify the existence of labor market segmentation by analyzing data on wages alone

The evolving impacts of COVID-19 on small businesses since the CARES Act

This note provides new evidence on how small business owners have been impacted by COVID-19, and how these effects have evolved since the passage of the CARES Act. As part of a broader and ongoing project, we collected survey data from more than 8,000 small business owners in the U.S. from March 28th, one day after the CARES Act was passed, through April 20th. The data include information on firm size, layoffs, beliefs about the future prospects of their businesses, as well as awareness of existing government relief programs. We provide three main findings. First, by the time the CARES Act was passed, surveyed small business owners were already severely impacted by COVID-19-related disruptions: 60% had already laid off at least one worker. Second, business owners’ expectations about the future are negative and have deteriorated throughout our study period, with 37% of respondents in the first week reporting that they did not expect to recover within 2 years, growing to 46% by the last week. Third, the smallest businesses had the least awareness of government assistance programs, the slowest growth in awareness after the passage of the CARES Act, and never caught up with larger businesses. The last finding indicates that small businesses may have missed out on initial Paycheck Protection Program funds because of low baseline awareness and differential access to information relative to larger firms

Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization

This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime