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Table 5 Average tariff and informality in the non-traded sector OLS and IV estimation

From: Trade liberalization and informality in Argentina: exploring the adjustment mechanisms

Dep. var.: residual informality rate OLS IV
(1) (2) (3) (4) (5) (6)
Definition 1: share of small-size firms in industry
 Log tariff − 0.03 [0.011]** − 0.021 [0.010]** − 0.0215 [0.00918]** − 0.113 [0.036]*** − 0.133 [0.063]* − 0.130 [0.0630]*
 Observations 32 32 32 32 32 32
 \(R^2\) 0.98 0.98 0.982    
First stage result
 Average  \(z^2\)     − 0.448 [0.117]*** − 0.376 [0.129]*** − 0.379 [0.131]***
 Observations     32 32 32
 \(R^2\)     0.76 0.79 0.79
Definition 2: indicator of small-size industry
 Log tariff − 0.03 [0.011]** − 0.021 [0.010]** − 0.0215 [0.00918]** − 0.113 [0.036]*** − 0.133 [0.063]* − 0.130 [0.0630]*
 Observations 32 32 32 32 32 32
 \(R^2\) 0.98 0.98 0.982    
First stage result
 Average  \(z^2\)     − 0.448 [0.117]*** − 0.376 [0.129]*** − 0.379 [0.131]***
 Observations     32 32 32
 \(R^2\)     0.76 0.79 0.79
Control variables
 Log relative supply Yes Yes Yes Yes Yes Yes
 Educational level of the labor force Yes Yes Yes Yes Yes Yes
 Fraction of small firms No Yes Yes No Yes Yes
 Linear time trend No No Yes No No Yes
  1. Time series regressions of residual informality on the national average tariff. Robust standard errors clustered at the year level 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
  2. *** Significant at 1%
  3. ** Significant at 5%
  4. * Significant at 10%