The Determinants of Informality in Mexico's States

Abstract

JT03337967Complete document available on OLIS in its original format This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. ECO/WKP(2013) Informality has important implications for productivity, economic growth, and the inequality of income. In recent years, the extent of informal employment has increased in many of Mexico's states, though highly heterogeneously. The substantial differences across states in terms of informal employment can be helpful in explaining differences in economic growth outcomes. This paper studies the determinants of informal employment using states' diverging outcomes to identify causal factors, taking into account potential endogeneity. The results suggest that multiple factors explain differences in informal employment across states, including per capita income, the quality of labour skills, differences in the prevalence of microenterprises, the cost to start a business, restrictions on foreign investment, the rule of law and incidence of corruption.JEL classification codes: J21, O17, O54. Keywords: Informal employment, microenterprises, regulatory policy, sub-national policy analysis. ************ Les déterminants de l'informalité dans les États du MexiqueL'informalité a des implications importantes sur la productivité, la croissance économique et l'inégalité des revenus. Ces dernières années, la mesure de l'emploi informel a augmenté dans la plupart des États du Mexique, bien que de manière très hétérogène. Les différences importantes entre les États en matière d'emploi informel peuvent être utiles pour expliquer les différences dans les résultats de la croissance économique. Cet article étudie les déterminants de l'emploi informel en utilisant les résultats divergents des États pour identifier les facteurs causaux, en tenant compte de l'endogénéité potentielle. Les résultats suggèrent que plusieurs facteurs expliquent les différences dans l'emploi informel à travers les États, y compris le revenu par habitant, la qualité de la main-d'oeuvre, les différences dans la prévalence des microentreprises, le coût pour démarrer une entreprise, les restrictions sur les investissements étrangers, l'État de droit et l'incidence de la corruption.Codes JEL : J21, O17, O54. Mots clés : L'emploi informel, micro-entreprises, la politique de réglementation, l'analyse politique sousnationale. © OECD (2013)You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of OECD as source and copyright owner is given. All requests for commercial use and translation rights should be submitted to rights@oecd.org.

Conclusion: Towards an agenda for good governance and integrity in the region

“…This publication provides timely evidence and guidance from which Ministers and Highlevel Officials participating in the meeting "Integrity for Good Governance in Latin America and the Caribbean: From Commitments to Action", taking place in Lima, Peru, on [18][19] October 2018, can draw useful insights. Moreover, aiming to move "from commitments to action", this document proposes an Action Plan with up to 103 concrete items that governments in the region can undertake to move towards corruption-free administrations and ensure a levelled ground for more inclusive policy-making.…”