Labour Standards and Informal Employment in Latin America

Abstract

Chapter 9 of the book "In Defence of Labour Market Institutions: Cultivating Justice in the Developing World" is presented. It investigates the empirical evidence for the hypothesis that stronger civic rights like freedom of association and collective bargaining rights, and higher wage shares in the formal sector reduce its employment thereby, contributing to informalization. It shows that tight job security regulations may discourage formal firms from dismissing workers during downturns and hiring workers during good times.