Recent developments of informal employment in Brazil: a labor supply-side analysis

Abstract

Informal employment (above 30%) is still very high in Brazil despite its recent drop. Therefore, studying labor market characteristics relation with the recent 10 percentage points informal rate reduction is important. The present work uses a household level data (PNAD) and the Monthly Employment Research Data (PME) to study the phenomena. The paper shows the participation decrease of lower educated groups with low level of work experience can explain up to 80% of the informality drop and argues the formalization increase was a result of two factors: informal workers moving from informal jobs to formal and unemployed people being absorbed by the formal sector.