Wages and informality in developing countries

Informal labour markets are a standard characteristic of labour markets in developing countries. It is often argued indeed that they are the engine of growth because their existence allows firms to operate in an environment where wage and regulatory to other papers which consider two sectors such as Albrecht, Navarro and Vroman (2009) and Bosch (2006). Our empirical analysis uses Brazilian labour force surveys. Finally, we use the model to discuss the relative merits of alternative policies towards informality.