The Impact of Informal Labour on Argentina's Public Debt:
A Structural Equation Modelling Analysis
DOI:
https://doi.org/10.46661/rev.metodoscuant.econ.empresa.11158Keywords:
informal labour, public debt, gross domestic product, structural equation modellingAbstract
This study analyses the impact of informal labour on Argentina's public debt between 2008 and 2019. Labour informality remains one of the main problems in the Argentinean labour market, affecting economic growth, tax collection and, consequently, public debt. Using structural equation modelling (SEM), we examine the direct and indirect relationships between informality and debt, as mediated by gross domestic product (GDP). The results show that both the direct relationship between labour informality and public debt and the indirect relationship mediated by GDP are significant and positive. This indicates that the increase in informal labour increases public debt both through tax evasion and through its negative impact on economic growth. Furthermore, the study highlights the existence of a ‘hard core’ of informality that makes it difficult to reduce informality through economic growth. This work provides relevant evidence for the formulation of public policies that seek to reduce labour informality, focusing on vulnerable groups such as women, youth and people with low levels of education, in order to mitigate its negative impact on public finances
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