These results are somewhat at odds with Paes de Barros and Corseuil (2001) who found no impact of constitutional proxies on labor demand, although since they employ a manufacturing survey that cannot separate formal and informal workers the way that it is done here,<sup>21</sup> to the degree that the sampled firms may simply be hiring the same number of workers, but granting fewer signed work cards, the results could be consistent with our findings. However, perhaps more consistent with their inability to explain job destruction rates, these are our least satisfactory specifications. Paes de Barros and Corseuil also use the PME in a difference in differences analysis of hazard rates of the termination of formal employment in the next month conditioned on current duration. In this sense, they are examining a very similar phenomenon to our separation rates.<sup>22</sup> They get ambiguous results in the hazard and transition intensities rates out of employment finding that separation rates have decreased after the constitutional changes for the short employment spells and increased for longer spells.<sup>23</sup> The finding that resolves both Paes de Barros and Corseuil and our weak modeling of job destruction, with our reasonably strong modeling of sector size and industry differentials are the the strong specifications for job creation. Here, all explanatory variables enter of expected sign and of a high degree of significance.

The difference specifications are broadly consistent although the negative autoregressive terms suggest that, in fact, we may be over differencing. Trade protection has similar signs although here effective rates of protection are the most important (only

> 21  The sample also differs in not covering firms of under 5 workers and in a different spatial coverage than the PME. They generate their finding by running the coefficients from monthly estimates of the autoregressive  term and the short run elasticity  with respect to wages on  an indicator for the constitutional change and controlling for a set of basic macroeconomic variables.

> 22 Although they identify two additional possible sources of cross sectional variation (quits versus layoffs and short versus long employment spells), the formal-informal partition of the worker population constitutes the preferred alternative of treatment (formal) and control (informal) groups.

23 When they regress monthly estimates for the aggregated hazard rate on an indicator for the constitutional change, an indicator for the group (treatment and control), a set of macroeconomic indicators and interactions between the group indicator and each of the macroeconomic indicators and also on the constitution indicator, they do not find evidence of any effect of the constitution change on the informal sector. For some cases, they observe that differences between the formal sector’s turnover variation (pre and post the constitutional change) and the informal workers’ turnover variation are positive for some spells and negative for others. For example, for the shortest spell (duration of employment less that 3 months) they found that the turnover variation in the informal workers was greater than in the formal cases, lower for the intermediate spell (duration of employment between 3 and 12 months) and almost equal for the longest spell (duration of employment between one and two years).

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