What causes firms to hide output? The determinants of informality
Abstract
In many developing countries, a significant part of economic activity takes place in the informal sector. Earlier work has examined the determinants of the size of the informal sector, focusing separately on factors such as tax and regulation burden, financial market development, and the quality of the legal system. We revisit this issue by using an integrated dataset which contains rich information on all these aspects. Testing the channels affecting the degree of informality, we find evidence that all previously identified factors indeed play a role in driving informality. In particular, and consistent with the suggested theoretical model, we find support for the significance of the quality of the legal system.(This abstract was borrowed from another version of this item.)
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Bibliographic Info
Article provided by Elsevier in its journal Journal of Development Economics.
Volume (Year): 85 (2008)
Issue (Month): 1-2 (February)
Pages: 1-27
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Web page: http://www.elsevier.com/locate/devec
Related research
Keywords:Other versions of this item:
- Gabriela Inchauste & Mark Gradstein & Era Dabla-Norris, 2005. "What Causes Firms to Hide Output? The Determinants of Informality," IMF Working Papers 05/160, International Monetary Fund.
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