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Discussion on

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A neat way to model the informal sector in emerging market economies ... The higher the rigidity on the formal labour market, the higher the size of informality ... – PowerPoint PPT presentation

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Title: Discussion on


1
NIPFP DEA CONFERENCE
  • Discussion on
  • The Costs and Benefits of Informalization in a
    two-sector Keynesian Model
  • By Batini, Levine and Loti
  • Annabelle Mourougane
  • OECD Economics Department

2
ROADMAP
  • Main contributions of the paper
  • Testing further the robustness of the results
  • Some more specific comments

3
A DOUBLE CONTRIBUTION
CONTRIBUTIONS
  • A neat way to model the informal sector in
    emerging market economies
  • The conclusions are policy relevant
  • Informalization has a welfare cost
  • Tax difference is a factor influencing the size
    of the informal sector
  • The higher the rigidity on the formal labour
    market, the higher the size of informality

4
TESTING THE ROBUSTNESS OF THE RESULTS
ROBUSTNESS
  • To what extent do the results depend on the
    calibration and specification choice?
  • Robustness tests on the structural parameters and
    test different functional forms
  • Improve the readers understanding of the model
    and cast some last on uncertainties

5
ADDITIONAL COMMENTS
SUGGESTIONS
  • A lower bound of welfare cost from
    informalization?
  • What would be the effect of adding further
    adjustment costs?
  • What about firms decisions?

6
Thank you
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