Macroeconomic and institutional aspects of the causes and consequences of informality

The high levels of informality make it impossible to fully implement an inclusive development model, which condemns poverty and economic vulnerability to one part of the population. of the population. For this reason, there have been a large number of studies analysing the effect of some economic policy variables on informality. However, most of these studies use econometric incidence analyses with discrete selection and time series. However, this type of analysis is insufficient because informality can be both a cause and a consequence of underdevelopment and poverty, which makes it extremely difficult to identify causality among variables.

On the other hand, policy interventions that can have a positive effect at the micro level are not necessarily beneficial at the macro level. For this reason, a set of structural analysis models will be introduced in this research project to see how the economic and social balances that aggregate the behavior of households, enterprises, and the public sector at the national and regional levels can be arrived at.

An integrated approach to informality will be adopted, introducing modern theories of imperfect labour, credit and goods markets into an economy in which formality and informality coexist (Perry et al. 2007; Alaimo et al. 2015), in a context of institutional fragility. Interdisciplinary analysis of the quality of institutions and their interrelation with informality will be an indispensable complement to the economic models on informality developed in the macroeconomic sphere.

The methodology of this project, which complements the sectoral and microeconomic approaches proposed in the program, is based on three pillars: i) moving the frontier of knowledge about informality and its relations with the rest of the economy; ii) generating new analytical and computational capacities; and iii) generating and sustaining spaces for dialogue among researchers, public policy makers and the productive sector.