Carneiro, Rafael Dix; Goldberg, Pinelopi K.; Meghir, Costas - National Bureau of Economic Research - 2021
. Heterogeneous firms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual … gains from trade are understated when the informal sector is omitted. (3) Trade openness results in large welfare gains even … welfare. (5) The effects of trade on wage inequality are reversed when the informal sector is incorporated in the analysis. (6 …