Book Chapter
The Impact of Regulation on Growth and Informality

This paper studies the effects of regulation on economic growth and the relative size of the informal sector in a large sample of industrial and developing countries. Along with firm dynamics, informality is an important channel through which regulation affects macroeconomic performance and economic growth. A heavier regulatory burden, particularly in product and labour markets, reduces growth and induces informality. These effects are, however, mitigated as the overall institutional framework improves.