The Changing Informal Labour Market in Brazil: Cyclicality versus Excessive Intervention

Although following an anti-cyclical behaviour over the last decade, Brazil's informal sector seems to have grown recently as a response to excessive government intervention in the productive system. Despite high inflation and sluggish economic performance, Brazil continues to live with low unemployment and only sporadic social unrest. A substantial informal sector is thought to be acting as a cushion to help minimize labour market instability. This paper reviews the main concepts and methodologies proposed in the literature, summarizes the results obtained by different authors, and presents some additional information on the recent informalization of the Brazilian labour markets.