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Tax policies, informality, and real wage rigidities

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dc.contributor.gruplacGrupo de investigaciones. Facultad de Economía. Universidad del Rosario
dc.creatorGarcía Suaza, Andrés Felipe
dc.creatorJaramillo Mejía, Fernando
dc.creatorSalazar, Marlon
dc.date.accessioned2023-04-28T20:31:33Z
dc.date.available2023-04-28T20:31:33Z
dc.date.created2023-04-28
dc.date.issued2023-04-28
dc.description.abstractDeveloping countries have a vast informal sector generally associated with low productivity levels. The response of informal employment to tax policies might depend on labor market rigidities. This paper proposes a theoretical framework consisting of a search and matching model with segmentation in the labor market to understand how tax policies and enforcement interact to determine the size of the formal sector. The analytical results show that decreasing payroll taxes increases formal employment demand, and enforcement expenditure decreases informal employment offers. The model suggests that a tax policy combination leads to a significant impact on informality reduction. Moreover, the magnitude of the effect of tax policies depends on real wage rigidities, i.e., when the economy faces high real wage rigidities, the tax policies have a higher effect on informality reduction.
dc.format.extent37 pp
dc.format.mimetypeapplication/pdf
dc.identifier.doihttps://doi.org/10.48713/10336_38378
dc.identifier.urihttps://repository.urosario.edu.co/handle/10336/38378
dc.language.isoeng
dc.publisherUniversidad del Rosario
dc.publisher.departmentFacultad de Economía
dc.relation.urihttps://ideas.repec.org/p/col/000092/020744.html
dc.relation.urihttps://ideas.repec.org/p/col/000092/020744.html
dc.rightsAttribution-NonCommercial-NoDerivatives 4.0 International*
dc.rights.accesRightsinfo:eu-repo/semantics/openAccess
dc.rights.accesoAbierto (Texto Completo)
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/4.0/*
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dc.source.instnameinstname:Universidad del Rosario
dc.source.reponamereponame:Repositorio Institucional EdocUR
dc.subject.jelE26
dc.subject.jelE62
dc.subject.jelJ21
dc.subject.jelJ46
dc.subject.jelJ31
dc.subject.jelO17
dc.subject.jelK42
dc.subject.keywordInformality
dc.subject.keywordPayroll taxes
dc.subject.keywordFiscal policy
dc.subject.keywordEnforcement
dc.subject.keywordSearch frictions
dc.subject.keywordShirking
dc.subject.keywordDeveloping countries
dc.titleTax policies, informality, and real wage rigidities
dc.typeworkingPaper
dc.type.hasVersioninfo:eu-repo/semantics/draft
dc.type.spaDocumento de trabajo
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