Publication:
Exchange Rate Appreciations, Labor Market Rigidities, and Informality

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dc.contributor.authorFiess, Norbert M.
dc.contributor.authorFugazza, Marco
dc.contributor.authorMaloney, William
dc.date.accessioned2014-08-14T21:02:15Z
dc.date.available2014-08-14T21:02:15Z
dc.date.issued2002-02
dc.description.abstractThis paper works at the interface of the literature exploring the raison d'etre of the informal labor market and that explaining the real exchange rate appreciations occurring in many Latin American countries during periods of reform. The authors first build a small country-Australian style model where the informal sector is seen as an unregulated non-tradables sector, augmented by heterogeneity in entrepreneurial ability and capital adjustment costs. They then examine the behavior of the model with and without a formal sector rigidity. It shows that the co-movements of relative formal/informal incomes, formal/informal sector size, and the real exchange rate can offer insight into the level of distortion in the labor market and the source of exchange rate fluctuations. The paper then explores time series data from Brazil, Colombia and Mexico using multivariate co-integration techniques to establish what "regime" each country is in at various periods of time. Mexico appears to be relatively undistorted and the 1987-92 appreciation appears to be largely a function of a boom in the non-tradables sector rather than wage inertia. In spite of a secular expansion of the informal sector there is little evidence of dualism or of a rigidity driven appreciation of the Real, from 1993-1996. Post 1995 Colombia corresponds to a classic segmented labor market and an appreciation partly driven by labor market rigidities. Graphical analysis suggests that neither the Argentine appreciation (1988-1992) or the celebrated Chilean appreciation (1975-1982) were driven by inertial forcesen
dc.identifierhttp://documents.worldbank.org/curated/en/2002/02/2874378/exchange-rate-appreciations-labor-market-rigidities-informality
dc.identifier.doi10.1596/1813-9450-2771
dc.identifier.urihttps://hdl.handle.net/10986/19335
dc.languageEnglish
dc.language.isoen_US
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 2771
dc.rightsCC BY 3.0 IGO
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectBARRIERS TO ENTRY
dc.subjectBUDGET CONSTRAINT
dc.subjectCAPITAL INTENSIVE
dc.subjectCAPITAL MARKETS
dc.subjectCONCEPTUAL FRAMEWORK
dc.subjectCONSUMERS
dc.subjectCONSUMPTION GROWTH
dc.subjectCONSUMPTION LEVELS
dc.subjectDOWNWARD PRESSURES
dc.subjectELASTICITIES
dc.subjectELASTICITY
dc.subjectELASTICITY OF SUBSTITUTION
dc.subjectEMPIRICAL ANALYSIS
dc.subjectEMPIRICAL EVIDENCE
dc.subjectEMPLOYMENT
dc.subjectEQUILIBRIUM
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATE DEPRECIATION
dc.subjectFOREIGN ASSETS
dc.subjectFORMAL SECTOR
dc.subjectGOVERNMENT REGULATION
dc.subjectGROWTH RATE
dc.subjectINDEXATION
dc.subjectINFLATION
dc.subjectINFORMAL SECTOR
dc.subjectINTEREST RATE
dc.subjectLABOR FORCE
dc.subjectLABOR MARKET
dc.subjectLABOR MARKETS
dc.subjectMARGINAL COSTS
dc.subjectMARGINAL PRODUCT
dc.subjectMARGINAL PRODUCTIVITY
dc.subjectMIGRATION
dc.subjectMINIMUM WAGES
dc.subjectNOMINAL EXCHANGE RATE
dc.subjectPRODUCTION
dc.subjectPRODUCTION FUNCTIONS
dc.subjectPRODUCTION INCREASES
dc.subjectPRODUCTIVITY
dc.subjectPRODUCTIVITY GROWTH
dc.subjectREAL EXCHANGE
dc.subjectREAL EXCHANGE RATE
dc.subjectREAL EXCHANGE RATES
dc.subjectREAL INTEREST
dc.subjectREAL INTEREST RATE
dc.subjectRELATIVE PRICE
dc.subjectSTABILIZATION POLICIES
dc.subjectSUBSTITUTION EFFECT
dc.subjectTIME SERIES
dc.subjectTRADABLE GOODS
dc.subjectUTILITY FUNCTION
dc.subjectWAGE RIGIDITIES
dc.subjectWAGES
dc.titleExchange Rate Appreciations, Labor Market Rigidities, and Informalityen
dspace.entity.typePublication
okr.crosscuttingsolutionareaJobs
okr.crossref.titleExchange Rate Appreciations, Labor Market Rigidities, and Informality
okr.date.disclosure2002-02-28
okr.date.doiregistration2025-04-10T09:41:22.621641Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2002/02/2874378/exchange-rate-appreciations-labor-market-rigidities-informality
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeSocial Protection and Labor
okr.globalpracticeFinance and Markets
okr.guid960641468773692634
okr.identifier.doi10.1596/1813-9450-2771
okr.identifier.externaldocumentum000265513_20040130102844
okr.identifier.internaldocumentum2874378
okr.identifier.reportWPS2771
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2004/01/30/000265513_20040130102844/Rendered/PDF/wps2771.pdfen
okr.region.administrativeLatin America & Caribbean
okr.topicEconomic Theory and Research
okr.topicBanks and Banking Reform
okr.topicEnvironmental Economics and Policies
okr.topicSocial Protections and Labor::Labor Policies
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicFiscal and Monetary Policy
okr.topicFinance and Financial Sector Development
okr.unitOff of Sr VP Dev Econ/Chief Econ (DECVP)
okr.volume1 of 1
relation.isAuthorOfPublicationc7d4d195-f430-5039-b564-a3e95b24a117
relation.isAuthorOfPublication.latestForDiscoveryc7d4d195-f430-5039-b564-a3e95b24a117
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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