The University of Southampton
University of Southampton Institutional Repository

The costs and benefits of informality

Batini, Nicoletta, Levine, Paul and Lotti, Emanuela (2011) The costs and benefits of informality , Guildford, GB University of Surrey 34pp. (Discussion Papers in Economics, DP 02/11).

Record type: Monograph (Discussion Paper)

Abstract

We explore the costs and benefits of informality associated with the informal sector lying outside the tax regime in a two-sector New Keynesian model. The informal sector is more labour intensive, has a lower labour productivity, is untaxed and has a classical labour market. The formal sector bears all the taxation costs, produces all the government services and capital goods, and wages are determined by a real wage norm. We identify two welfare costs of informality: 1. long-term costs of restricting taxes to the formal sector and 2. short-term fluctuation costs of tax changes to finance fluctuations in government spending. The benefit of informality derives from its wage flexibility. We investigate whether taxing the informal sector and thereby reducing its size sees a net welfare improvememnt

Full text not available from this repository.

More information

Published date: February 2011
Organisations: Economics

Identifiers

Local EPrints ID: 339202
URI: http://eprints.soton.ac.uk/id/eprint/339202
PURE UUID: 36f07370-2bf8-49c3-a412-d9f01b74915c

Catalogue record

Date deposited: 25 May 2012 09:26
Last modified: 18 Jul 2017 05:53

Export record

Contributors

Author: Nicoletta Batini
Author: Paul Levine
Author: Emanuela Lotti

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×