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Informal sector
About: Informal sector is a research topic. Over the lifetime, 12052 publications have been published within this topic receiving 212182 citations.
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TL;DR: The shadow economy constitutes approximately 10% of GDP in the UK; about 14% in Nordic countries and about 20 - 30% in many southern European countries as mentioned in this paper, and the main drivers of the shadow economy are (in order): tax and social security burdens, tax morale, the quality of state institutions and labour market regulation.
Abstract: Measurement of the shadow economy is notoriously difficult as it requires estimation of economic activity that is deliberately hidden from official transactions. Surveys typically understate the size of the shadow economy but econometric techniques can now be used to obtain a much better understanding of its size. The shadow economy constitutes approximately 10 per cent of GDP in the UK; about 14 per cent in Nordic countries and about 20 - 30 per cent in many southern European countries. The main drivers of the shadow economy are (in order): tax and social security burdens, tax morale, the quality of state institutions and labour market regulation. A reduction in the tax burden is therefore likely to lead to a reduction in the size of the shadow economy. Indeed, a virtuous circle can be created of lower tax rates, less shadow work, higher tax morale, a higher tax take and the opportunity for lower rates. Of course, a vicious circle in the other direction can also be created.
450 citations
TL;DR: In this paper, the authors present new data on effective corporate income tax rates in 85 countries in 2004 and show that corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy.
Abstract: We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. Corporate tax rates are correlated with investment in manufacturing but not services, as well as with the size of the informal economy. The results are robust to the inclusion of many controls.
447 citations
TL;DR: In this article, the authors explored the gender sensitivity of codes currently applied in the African export horticulture sector from an analytical perspective that combines global value chain and gendered economy approaches, and developed a "gender pyramid" which provides a framework for mapping and assessing the gender content of codes of conduct.
426 citations
TL;DR: The authors examines the informal economy and its relationship to commonly held theories of industrial development, and finds that these assumptions are wrong, including the identification of informality with conditions in the less developed countries, are wrong.
Abstract: This paper examines the informal economy and its relationship to commonly held theories of industrial development. Although these theories stem from very different intellectual traditions, their general assumption has been that widespread informal economic activities are primarily a feature of Third World economies, in which they function as a refuge from destitution; such activities are presumably destined to desappear with the advance of modern, industry-led growth. Evidence is presented that indicates that these assumptions, including the identification of informality with conditions in the less developed countries, are wrong. Alternative interpretations of the resilience of these activities in Third World countries, despite rapid industrialization, and their continuity and apparent revival in the advanced economies and discussed.
424 citations
01 Jan 2018
TL;DR: The main challenge for the transition from the informal economy to the formal economy is finding the right policy mix that corresponds to the diversity of characteristics and drivers of informality as mentioned in this paper, which is the main challenge of the transition to formalization.
Abstract: Two billion workers - representing 61.2 per cent of the world's employed population - are in informal employment. Evidence shows that most people enter the informal economy not by choice, but as a consequence of a lack of opportunities in the formal economy and in the absence of other means of livelihood. Workers in the informal economy differ widely in terms of income level, age, education level, status in employment, sector, type and size of enterprise, location of workplace (rural or urban, private or public areas), degree of coverage of social and employment protection. The main challenge for the transition to the formal economy is finding the right policy mix that corresponds to the diversity of characteristics and drivers of informality. Reliable and relevant statistics are needed to better understand these complex aspects of informality and monitor progress towards formalization.
424 citations