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Latin American labor markets feature large informal sectors. In practice, however, the simple duality formal-informal has many different shades: firms tend to comply more with certain legislation than with other. Recent evidence has suggested that minimum wages have significant effects on the informal sector (Bell (1997) for Mexico; Gindling and Terrell (2004) for Costa Rica; Lemos (2004) and Fajnzylver (2001) for Brazil; and Maloney and Nuñez (2004) for Colombia). Further, some of this evidence suggests effects throughout a large part of the wage distribution. This has been interpreted as evidence of 'lighthouse' or numeraire effects. We test this hypothesis using panel data from Peru to identify effects throughout the wage distribution. Although there are some effects on informal sector workers, overall results provide little support for numeraire or 'lighthouse' effects. Labor monthly earnings are affected only at the bottom of the distribution (0.25-0.60 of the minimum wage), made up mostly of informal workers, and for formal workers earning between the old the new minima. Negative effects on the probability of retaining employed status after a minimum wage shock are either weak or non significant for wage earners below the minimum wage, but significant for formal workers 'trapped' between minima, and for both formal and informal earning between 1.2 and 2 times the minimum wage. Independent workers earning below minimum suffer negative effects on both earnings and employment. ; Instituto de Investigaciones Económicas

We consider a set-up where two governments have either conflicting or matching preferences on the provision of differentiated (local) goods supplied by a common monopoly bureau. We develop a two-stage game. At stage-1, the two governments decide whether or not to merge into a single institution. At stage-2, all players simultaneously and independently take their decisions in terms of production and rents, with perfect knowledge of the other players' strategies. We solve the subgame perfect Nash equilibrium of this game, and show that, if the bureau immediately updates its objective function to institutional changes, then the governments always prefer merging. However, if there is an initial bureaucratic inertia in adjusting the bureau's objective function to the institutional change, then ruling politicians may prefer decentralisation to centralisation, depending on the strategic properties of the compliance game and on their own discounting.

This article adds to the regulatory compliance literature through the theoretical development and experimental testing of two endogenous audit mechanisms that use contemporaneous relative comparisons, based on disclosed information or imperfect signals of compliance effort, to generate a compliance competition among agents. This type of audit mechanism has some advantages over the more widely studied dynamic audit mechanisms that condition an agent's audit probability on past compliance, and provides an alternative explanation for the stylized fact, in many settings, that most agents are compliant most of the time even though audit rates and expected penalties are low.

Allegations of voter fraud accompany many real-world elections. How does electoral malpractice affect the acceptance of elected institutions? Using an online experiment in which people distribute income according to majority-elected rules, we show that those who experience vote buying or voter disenfranchisement during the election are subsequently less willing to comply with the rule. On average, the detrimental impact of electoral malpractice on compliance is of the same magnitude as removing the election altogether and imposing a rule exogenously. Our experiment shows how corrupting democratic processes can impact economic behavior and sheds light on the behavioral mechanisms underlying "rule legitimacy".

I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants' contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.

I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants' contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.

This paper investigates strategic forum selection approaches and compliance with interstate dispute resolution settlements. Research shows that (a) management design features, like decision control and international organizations, affect compliance, (b) states strategically select among bilateral and third-party fora, and (c) anticipated settlement outcomes and enforcement inform pre-negotiation stages. A skeptical perspective suggests that states only select management approaches when they are confident in their ability to fully cooperate. Using Issue Correlates of War data, I test an endogenous model of forum selection and compliance. Statistical analysis finds that states strategically select management approaches in two cases: state-led mediation and ad hoc arbitration. Closer analysis suggests that, rather than tempering the promotion of mediation's and arbitration's pacifying benefits, conflict management scholarship should investigate more comparisons across dispute resolution approaches. This project's multidimensional framework reveals that mediation and arbitration share similar foundations that logically link their selection and inclination toward compliance.

This paper investigates strategic forum selection approaches and compliance with interstate dispute resolution settlements. Research shows that (a) management design features, like decision control and international organizations, affect compliance, (b) states strategically select among bilateral and third-party fora, and (c) anticipated settlement outcomes and enforcement inform pre-negotiation stages. A skeptical perspective suggests that states only select management approaches when they are confident in their ability to fully cooperate. Using Issue Correlates of War data, I test an endogenous model of forum selection and compliance. Statistical analysis finds that states strategically select management approaches in two cases: state-led mediation and ad hoc arbitration. Closer analysis suggests that, rather than tempering the promotion of mediation's and arbitration's pacifying benefits, conflict management scholarship should investigate more comparisons across dispute resolution approaches. This project's multidimensional framework reveals that mediation and arbitration share similar foundations that logically link their selection and inclination toward compliance. [Reprinted by permission; copyright Sage Publications Ltd.]

If ignored, noncompliance with a treatment or nonresponse on outcome measures can bias estimates of treatment effects in a randomized experiment. To identify and estimate causal treatment effects in the case where compliance and response depend on unobservables, we propose the parametric generalized endogenous treatment (GET) model. GET incorporates behavioral responses within an experiment to measure each subject's latent compliance type and identifies causal effects via principal stratification. Using simulation methods and an application to field experimental data, we show GET has a dramatically lower mean squared error for treatment effect estimates than existing approaches to principal stratification that impute, rather than measure, compliance type. In addition, we show that GET allows one to relax and test the instrumental variable exclusion restriction assumption, to test for the presence of treatment effect heterogeneity across a range of compliance types, and to test for treatment ignorability when treatment and control samples are balanced on observable covariates.