Fiscal Policy and the Informal Sector in Developing Countries: The Case of Gabon

Abstract

Tax pressure is pointed out as one of the main causes for the development of informality. To the extent that the informal economy is perceived, inter alia, as a response to excessive and inappropriate public regulation. The purpose of our study is mainly to verify such a relationship in the context of the Gabonese economy thanks to the estimation of a model with changes of regimes of the individual time series at the Hansen [1]. Overall, the impact of tax repression on the informal economy differs depending on the level of the tax rate. In other words, there are two growth regimes in the informal sector conditional on a tax threshold of 7.10%.