Lurking in the Shadows : The informal sector and government policy

@inproceedings{Ihrig2000LurkingIT,
  title={Lurking in the Shadows : The informal sector and government policy},
  author={Jane Ihrig and Karine S. Moe},
  year={2000}
}
This paper develops a dynamic model that sheds light on the evolution of the informal sector. We show how tax rates and enforcement policies in uence the size of this sector, as well as how the sector naturally shrinks as an economy transitions towards steady state. We nd that a reduction in the tax rate is the best policy for decreasing the size of the informal sector. This policy not only reduces informal employment, but also increases the standard of living. The distortion resulting from the… CONTINUE READING

From This Paper

Figures, tables, and topics from this paper.

References

Publications referenced by this paper.
Showing 1-10 of 13 references

Regulatory Discretion and the UnoÆcial Economy.

  • Johnson, Simon, Kaufmann, Daniel, Zoido-Lobaton
  • American Economic Review,
  • 1998
Highly Influential
4 Excerpts

Nobodys Business but My Own: Self Employment and Small Enterprise in Economic Development.

  • Gollin, Doug
  • 2001

Informality and Rent-Seeking Bureaucracies in a Model of Long-Run Growth.

  • Sarte, Pierre-Daniel
  • Journal of Monetary Economics August
  • 2000

Shadow Economies: Size, Causes, and Consequences.

  • Schneider, Friedrich, Enste, Dominik
  • Journal of Economic Literature March 2000
  • 2000

Tax Policies and Informal Employment: The Asian Experience.

  • Ihrig, Jane, Moe, Karine
  • mimeo, March,
  • 2000

The Economics of the Informal Sector: A Simple Model and Some Empirical Evidence from Latin America." Carnegie-Rochester Conference Series on Public Policy

  • Loayza, Norman
  • Dec 1996,
  • 1996

Marginal Income Tax Rates and Economic Growth.

  • Easterly, William, Sergio Rebelo
  • European Economic Review April 1993,
  • 1993

Technology Adoption and the Mechanics of Economic Development," in Alex Cukierman; Zvi Hercowitz, and Leonardo Leiderman, eds., Political Economy, Growth, and Business Cycles

  • Parente, L Stephen, Prescott, C Edward
  • 1992

Modelling the informal sector formally

  • Rauch, E James
  • Journal of Development Economics,
  • 1991

Similar Papers

Loading similar papers…