A Literature Review on Trede and Informal

7/29/2019 A Literature Review on Trede and Informal

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A LITERATURE REVIEW ON TRADE AND INFORMAL

LABOUR MARKETS IN DEVELOPING COUNTRIES

Laura Munro

Consultant to the OECD

This report provides a summary of the literature on the relationship between trade

and informality in developing countries, with an emphasis on the BRIICS. While main

conclusions of the ILO and WTO (2009) literature review are highlighted, the report

focuses on additional and more recent literature. The report investigates four key issues in

the literature on trade and informal labour markets: (1) theoretical predictions for trade

and informality; (2) how trade liberalisation affects informal labour markets; (3) how

trade flows affect the informal economy; and (4) what implications informality has for

trade and growth. The main conclusion from this review is that empirical evidence on the

relationship between trade and informality is complex and context-specific. Several of the

empirical analyses reviewed in this report suggest that this variation is due to

countryspecific characteristics (in particular, labour market rigidity, capital mobility,

level of economic development and heterogeneity of the informal workforce). Variation

can also be partly explained by the fact that different methodologies are used and

different measures of informality are employed across studies.

JEL classification: F16 (Trade and labour market interactions).

Keywords: Trade, employment, wages, inclusive growth.


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THE DEPARTMENT OF LABOUR IS RESPONSIBLE FOR THE EFFECTIVE

OPERATION OF THE LABOUR MARKET AS THE FOUNDATION OF

ECONOMIC GROWTH.

New Zealands economy has been greatly impacted by the global economic

downturn, and its effects are being sharply seen in the labour market, as high levels of

participation and low unemployment are being replaced by a contracting labour market

and rising sunemployment. This operating environment poses many challenges, and

positive labour market outcomes are therefore critical to support New Zealands

economic recovery.

The Department will respond to these challenges in a number of ways through

its expertise in labour market economics, its regulatory and policy settings for

employment, workplace health and safety and through managing the volume and mix of

migrants to New Zealand. Our work programme needs to balance what is required to

protect jobs for New Zealanders, limit recessionary impacts on the labour market and

build the skills and workplace conditions that will increase productivity.

Our global and national service delivery network provides the Department with

up-to- date labour market intelligence. This will be used to advise Government and

business on how best to address changing labour market needs and remedy any failures or

inefficiencies identified in the labour market. This is key to delivering a flexible and

resilient labour market that will keep New Zealanders in work and businesses operating

maintaining standards of fairness and safety and putting in place practices that will

improve productivity in the long term. A number of legislative reviews and a focus on

cost drivers of injury prevention and rehabilitation for ACC will also be a priority for the

Department. These aim to strengthen workplaces while reducing compliance costs.


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Immigration services also need to respond to changes in demand in a way that

will strengthen New Zealands labourmarket and economy. The Department will focus

on what is needed to deliver a world-class immigration service and will continue

addressing the performance issues that have been the focus of a number of reviews.

Programmes will centre on improving efficiencies, strengthening core capability and

processes, and delivering targeted initiatives that address short-term skill and investment

needs.

Organisational development goals have been established which I expect the

Department to deliver by 2012. These will rebuild and improve our operating

infrastructure and core systems, processes and capabilities that are essential to our service

delivery. An ongoing priority for the Department is to ensure the cost-effectiveness of

our work and to maximise the value it creates. Alongside core processes to measure

savings and benefits, a programme of internal value-for-money reviews is being

implemented that will produce a mix of additional efficiency and savings gains.

This Statement of Intent sets out the Departments strategic direction and work

programme for the next three years. We need to build a new momentum, and I look

forward to leading the Department in implementing the Ministers priorities. The gains

from optimal labour market performance will benefit all New Zealanders and willaccelerate the growth of New Zealands economy.

Christopher Blake

Secretary of Labour

Documents

A Literature Review on Trede and Informal