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Measuring the Informal Economy in Latin America and the Caribbean

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  • Guillermo Javier Vuletin

Abstract

This paper estimates the size of the informal economy for 32 mainly Latin American and Caribbean countries in the early 2000s. Using a structural equation modeling approach, we find that a stringent tax system and regulatory environment, higher inflation, and dominance of the agriculture sector are key factors in determining the size of the informal economy. The results also confirm that a higher degree of informality reduces labor unionization, the number of contributors to social security schemes, and enrollment rates in education.

Suggested Citation

  • Guillermo Javier Vuletin, 2008. "Measuring the Informal Economy in Latin America and the Caribbean," IMF Working Papers 2008/102, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/102
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