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dc.contributor.authorColombo, Emilio
dc.contributor.authorMenna, Lorenzo
dc.contributor.authorTirelli, Patrizio
dc.date.accessioned2019-07-16T00:46:23Z
dc.date.available2019-07-16T00:46:23Z
dc.date.issued2019
dc.identifier.issn0305-750X
dc.identifier.doi10.1016/j.worlddev.2019.03.001
dc.identifier.urihttp://hdl.handle.net/10072/386450
dc.description.abstractWe provide evidence, based on a large sample of countries, on the effects of financial crises on key labor market indicators, including official and unofficial employment, unemployment and the participation rate. Crises are followed by a drop in the official market participation rate and by an increase in informal employment. These responses are strongly persistent. Empirical results are then interpreted with a DSGE model which accounts for informality and for financial and labor market frictions. In this framework the informal sector acts as a buffer which absorbs workers in bad times and vice versa. Our simulations suggest the informal sector also is a crisis amplifier for the official economy. For a given financial shock, the ensuing contraction in the official economy is deeper and more persistent the larger the initial size of the unofficial sector. This implies that in less developed economies financial crises cause a relatively stronger reallocation of inputs towards less efficient sectors, expose a larger fraction of the population to the adverse effects of informality, cause a sharper deterioration of public finances limiting governments ability to supply public goods and to engage in countercyclical fiscal policies.
dc.description.peerreviewedYes
dc.languageEnglish
dc.language.isoeng
dc.publisherElsevier
dc.relation.ispartofpagefrom1
dc.relation.ispartofpageto22
dc.relation.ispartofjournalWorld Development
dc.relation.ispartofvolume119
dc.subject.fieldofresearchApplied Economics
dc.subject.fieldofresearchEconomics
dc.subject.fieldofresearchStudies in Human Society
dc.subject.fieldofresearchcode1402
dc.subject.fieldofresearchcode14
dc.subject.fieldofresearchcode16
dc.titleInformality and the labor market effects of financial crises
dc.typeJournal article
dc.type.descriptionC1 - Articles
dc.type.codeC - Journal Articles
dcterms.licensehttp://creativecommons.org/licenses/by-nc-nd/4.0/
dc.description.versionAccepted Manuscript (AM)
gro.rights.copyright© 2019 The Author(s). Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence, which permits unrestricted, non-commercial use, distribution and reproduction in any medium, providing that the work is properly cited.
gro.hasfulltextFull Text
gro.griffith.authorTirelli, Patrizio


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