Courting Informal Workers: Exclusion, Forbearance, and the Left

Abstract

AbstractLeftist governments with strong links to organized labor are expected to increase the number of people protected by job security rules. But do they? I explore whether the Left in power at the local level in Brazil cracks down on enterprises that employ noncontract, informal‐sector workers, and implements policies aimed at reducing the size of the informal sector. With a close‐election regression‐discontinuity design, I show that mayors from the Workers' Party (PT) in fact slow down enforcement and improve conditions in the informal sector, rather than encouraging a shift to formal jobs. This reflects a challenge that leftist parties face across the world: how to simultaneously improve the employment prospects and conditions of workers in precarious employment and those in full‐time jobs in the context of increased global competition, segmented labor markets and, in Latin America, truncated welfare states.