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Table 7 Average tariff and wage differentials formal and informal workers OLS and IV estimators

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

Dep. var.: residual wage differential OLS IV
(1) (2) (3) (4) (5) (6)
A) Definition 1: share of small-size firms in industry
 Log of average tariff − 0.116 [0.058]* − 0.117 [0.068]* − 0.003 [0.112] − 0.274 [0.140]* − 0.358 [0.178]* − 0.377 [0.203]*
 Log of average tariff * NT − 0.121 [0.105] − 0.108 [0.112] − 0.130 [0.124] − 0.258 [0.195] − 0.202 [0.216] − 0.261 [0.244]
 Observations 64 64 64 64 64 64
 \(R^2\) 0.45 0.46 0.505    
First stage result
 Log of average tariff
  Average  \(z^2\)     − 0.633 [0.190]*** − 0.505 [0.174]*** − 0.474 [0.137]***
  Average  \(z^2\) * NT     0.006 [0.214] − 0.044 [0.198] 0.110 [0.158]
  \(R^2\)     0.34 0.49 0.69
 Log of average tariff * NT
  Average  \(z^2\)     − 0.059 [0.156] 0.049 [0.143] 0.062 [0.136]
  Average  \(z^2\) * NT     − 0.533 [0.176]*** − 0.579 [0.162]*** − 0.510 [0.156]***
  \(R^2\)     0.98 0.99 0.99
B) Definition 2: indicator of small-size industry
 Log of average tariff − 0.116 [0.058]* − 0.117 [0.068]* − 0.004 [0.112] − 0.275 [0.139]* − 0.358 [0.177]* − 0.378 [0.202]*
 Log of average tariff * NT − 0.121 [0.105] − 0.107 [0.111] − 0.129 [0.124] − 0.256 [0.195] − 0.201 [0.216] − 0.260 [0.243]
 Observations 64 64 64 64 64 64
 \(R^2\) 0.45 0.46 0.50    
First stage result
 Log of average tariff
  Average  \(z^2\)     − 0.633 [0.190]*** − 0.505 [0.174]*** − 0.474 [0.137]***
  Average  \(z^2\) * NT     0.006 [0.214] − 0.044 [0.198] 0.110 [0.158]
  \(R^2\)     0.34 0.49 0.688
 Log of average tariff * NT
  Average  \(z^2\)     − 0.058 [0.156] 0.048 [0.143] 0.062 [0.135]
  Average  \(z^2\) * NT     − 0.533 [0.176]*** − 0.579 [0.162]*** − 0.510 [0.156]***
  \(R^2\)     0.98 0.99 0.99
Log relative supply Yes Yes Yes Yes Yes Yes
Log relative supply of informal workers No Yes Yes No Yes Yes
Log relative supply of skilled workers No Yes Yes No Yes Yes
Linear time trend No No Yes No No Yes
  1. Times series regressions of formal-informal residual wage differential on the national average tariff. Robust standard errors clustered by year and sector 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 10%