Taxes, inequality and the size of the informal sector

Dessy, Sylvain; Pallage, Stéphane

doi:10.1016/s0304-3878(02)00086-x

Cited by 95 publications

(34 citation statements)

References 14 publications

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“…As documented by previous studies, 16 With respect to observable characteristics, until the mid 1990s around seventy per cent of informal workers were male. By the year 2002 the proportion of female working informal has increased but it is still below forty per cent.…”

Section: Informalitymentioning

confidence: 55%

“…An increase in the proportion of informal workers would therefore result into higher wage 1 8 Maloney (1999) is one of the …rst contribution that studies the determinants of the choice of individual workers to go informal. Dessy and Pallage (2003) and DePaula and Schenkeiman (2007) are two recent contributions that study the factors driving the choice of …rms to become informal. The results in the previous section show that for all indicators and both at the upper and at the lower tail of the distribution wage inequality is much higher among informal workers.…”

Section: Informality and Wage Inequalitymentioning

confidence: 99%

See 1 more Smart Citation

Mexico in the 1990s: The Main Cross-Sectional Facts

Binelli

Attanasio

2010

Review of Economic Dynamics

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We describe the main cross-sectional facts on individual and household earnings, labor supply, income, consumption and wealth in Mexico in the decade of the 1990s. We use two di¤erent data sources: the Mexican Employment Survey (ENEU) and the Mexican Income and Expenditure Survey (ENIGH). The contribution of the paper is twofold. First, we integrate the two surveys to provide a complete characterization of the changes in employment, wages, income, consumption and wealth in the 1990s. Second, we highlight some distinctive features that characterize Mexican economy in this decade. In particular, we focus on the increase in the number of informal workers in the mid 1990s and we study its relationship with the increase in wage inequality.

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Section: Informalitymentioning

confidence: 55%

Section: Informality and Wage Inequalitymentioning

confidence: 99%

Mexico in the 1990s: The Main Cross-Sectional Facts

Binelli

Attanasio

2010

Review of Economic Dynamics

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“…Similarly, Sarte (2000) and Choi and Thum (2005) describe environments where the option to operate informally mitigates the distortions introduced by a rent-seeking bureaucracy. 10 In Dessy and Pallage (2003), the productivity differential between the formal and the informal sector depends on the amount of taxes levied which makes the emergence of economies with high tax rates and large informal sectors endogenous.…”

Section: Theoriesmentioning

confidence: 99%

18 The Informal Sector in Developing Countries: Output, Assets, and Employment

Pratap¹,

Quintin²

2008

Personal Wealth From a Global Perspective

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This study documents four key facts about informal economic activities: (1) the size of the informal sector varies greatly across nations; (2) this size is strongly correlated with economic development, the tax burden, and the rule of law; (3) the informal sector emphasizes small-scale, self-financed and unskilled labour intensive economic activities; and (4), while financial markets are generally segmented along formal/informal lines in developing nations there is no compelling evidence that this is true for labour markets. We review the existing theoretical literature on the informal sector and describe a simple model with a tradeoff between tax evasion and access to formal sources of outside finance which is consistent with much of the existing evidence. Finally, the study discusses the challenges associated with measuring informal sector assets.

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“…It was noted that a unit increase in informal sector, brings about 569 percent decrease in unemployment rate compare to the formal sector output which can only cut unemployment down by 75 percent. The work of Fasanya and Onakoya (2012) authenticates the finding of Akerele (1997) and Dessy and Pallage, (2003) that informal sectors activities have substantially absorb the large pool of labour force than the formal sector, hence, reduces the rate of unemployment.…”

Section: Literature Reviewmentioning

confidence: 62%