Matching and City Size Wage Gaps under the Shadow of Informality: Evidence from Mexico

Larger labor markets provide workers and firms with better opportunities to find each other, enhancing positive assortative matching. We measure the extent of these agglomeration externalities in Mexico, where informal work represents a large share of employment and coexists with formal labor markets. Using a matched employer-employee dataset comprising the near universe of formal workers […]

Visualization, Identification and Estimation in the Linear Panel Event-Study Design

Linear panel models, and the «event-study plots» that often accompany them, are popular tools for learning about policy effects. We discuss the construction of event-study plots and suggest ways to make them more informative. We examine the economic content of different possible identifying assumptions. We explore the performance of the corresponding estimators in simulations, highlighting […]

The minimum wage in formal and informal sectors: Evidence from an inflation shock

I estimate the effect of the minimum wage on formal wages, informal wages, and employment in Colombia. I exploit an unexpected increase in the real minimum wage during 1999. My analysis combines unconditional quantile regressions with a differences-in-differences design. I find evidence of wage responses for wages close to the minimum wage. The increases are […]