Trade liberalization and informality in Argentina: exploring the adjustment mechanisms

Latin American Economic Review

Table 12 Robustness to industry size definition; average tariff and informality; OLS and IV estimation.

	OLS				IV
	Option 1		Option 2		Option 1		Option 2
	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
A) Definition 1: share of small-size firms in industry
Log of average tariff	0.016 [0.017]	0.005 [0.015]	0.020 [0.016]	0.010 [0.015]	− 0.042 [0.023]^*	− 0.058 [0.039]	− 0.016 [0.024]	− 0.027 [0.037]
Observations	32	32	32	32	32	32	32	32
\(R^2\)	0.94	0.94	0.94	0.94
First stage result
Average z ²					− 0.418 [0.098]^***	− 0.430 [0.120]^***	− 0.402 [0.096]^***	− 0.429 [0.119]^***
Observations					32	32	32	32
\(R^2\)					0.74	0.76	0.72	0.74
B) Definition 2: indicator of small-size industry
Log of average tariff	0.011 [0.017]	0.000 [0.015]	0.019 [0.016]	0.009 [0.016]	0.038 [0.023]	0.021 [0.038]	0.000 [0.025]	− 0.009 [0.037]
Observations	32	32	32	32	32	32	32	32
\(R^2\)	0.94	0.94	0.94	0.94
First stage result
Average \(z^2\)					− 0.422 [0.098]^***	− 0.423 [0.119]^***	− 0.407 [0.095]^***	− 0.431 [0.118]^***
Observations					32	32	32	32
\(R^2\)					0.74	0.76	0.73	0.75
Log relative supply	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Educational level of the labor force	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Fraction of small firms	No	Yes	No	Yes	No	Yes	No	Yes

Robust standard errors clustered by year in brackets. Average \(z^{2}\) is the average of the instrument based on exchange rates of main partners weighted by the participation of each industry in total employment
^***Significant at 1%
^*Significant at 10%