# **Table 7a. Model in levels (dynamic)**

|Variable|Sector Size|Industry Differentials|Creation|Destruction|
|---|---|---|---|---|
|Dependent (-1)|**0.64 *****<br>_0.06_|**0.46 *****<br>_0.05_|**0.07**<br>_0.07_|**0.071**<br>_0.054_|
|Dependent (-2)|**0.17 *****|**0.18 *****|**0.29 *****|**0.053**|
||_0.04_|_0.05_|_0.06_|_0.050_|
|Effective Tariff|**-1.08**|**0.03**|**0.28 ***|**-0.003**|
||_2.02_|_0.09_|_0.16_|_0.004_|
|Import Penetration|**-8.17 ****|**-0.31 *****|**-0.43 *****|**-0.005**|
||_3.19_|_0.10_|_0.15_|_0.005_|
|Tenure|**0.44 *****|**0.02 ***|**0.24 *****|**0.000**|
||_0.12_|_0.01_|_0.04_|_0.001_|
|Tenure (-1)|**-0.24**|**-0.05 *****|**-0.32 *****|**0.000**|
||_0.16_|_0.01_|_0.02_|_0.000_|
|Overtime|**3.21 *****|**0.23 *****|**-0.78 *****|**0.001**|
||_0.99_|_0.04_|_0.04_|_0.003_|
|Overtime (-1)|**-5.56 *****|**-0.29 *****|**0.65 *****|**-0.006 *****|
||_1.38_|_0.06_|_0.06_|_0.002_|
|Union|**0.21**|**0.11**|**-0.56 *****|**0.018 *****|
||_1.24_|_0.10_|_0.16_|_0.003_|
|Union (-1)|**3.07 ****|**-0.14 ***|**0.51 *****|**-0.016 *****|
||_1.52_|_0.07_|_0.08_|_0.002_|
|C|**14.80 *****|**1.53 *****|**0.49 *****|**0.012 *****|
||_3.91_|_0.26_|_0.07_|_0.003_|
|R2 (Weighted)|0.997|0.998|0.765|0.810|
|R2 (Unweighted)|0.986|0.964|0.736|0.378|
|Durbin Watson|2.08|2.06|2.10|2.03|
|Included observations|18|18|18|18|
|Cross-section included|18|18|18|18|
|Total pool observations|324|324|324|324|

## **Legend**

Coefficients in bold; SD in italics

***, **, * indicate significance at 1%, 5% and 10% level, respectively

- Creation Proxy of formal job creation (% of people moving from OLF, U, SE, I to F out of total OLF, U, SE and I). Pooled (by year) instantaneous transition computed using monthly data from the Monthly Labor Survey (PME) from Jan 1983 to Dec 2002 following the procedure by Geweke et al. (1986) outlined in section III. Computations are based on 10.000 Monte Carlo replications.

- Destruction Proxy of formal job destruction (% of people moving from F to U out of total F). Pooled (by year) instantaneous transition computed using monthly data from the Monthly Labor Survey (PME) from Jan 1983 to Dec 2002 following the procedure by Geweke et al. (1986) outlined in section III. Computations are based on 10.000 Monte Carlo replications.

- Sector size Share of formal (F) on specific sector workforce Industry Industry informality differentials (betas coming from 1st stage regression in which F is explained with differentials individual characteristics and industry differentials) Effective Effective protection (scaled by 10<sup>-3</sup> ). Sources are: Kume et al. (2003) for 1987-1998; Pinheiro and Bacha Tariff de Almeida (1994) for 1983-1986

Imports Imports penetration (weighted imports/consumption). Sources are: Muendler (2002) for 1987-1999; Penetration Pinheiro and Bacha de Almeida (1994) for 1983-1986; Nassif and Pimentel (2004) for 1999-2002 Tenure Dummy (active since 1989) interacted with tenure (in years) of workers fired in the specific industrial sector (average 1983-1987) Overtime Dummy (active since 1989) interacted with the proportion of workers working more than 44 hours in the specific industrial sector (average 1983-1987) Union Dummy (active since 1989) interacted with union enrollment - understood as % of unionized workers in the specific industrial sector - (average 1986 and 1988) 44