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The tax elasticity of formal work in African countries

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  • Andy McKay
  • Jukka Pirttilä
  • Caroline Schimanski

Abstract

A key policy problem in most developing countries is the size of the informal sector and its persistence over time. In need to increase their tax revenues, policy makers face a trade-off between decreasing tax rates (making formalizing potentially more attractive) and alternatively raising tax rates (potentially slowing down the formalization of the economy if people prefer informal employment or self-employment).

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  • Andy McKay & Jukka Pirttilä & Caroline Schimanski, 2019. "The tax elasticity of formal work in African countries," WIDER Working Paper Series wp-2019-69, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2019-69
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    1. Xavier Jara & Pia Rattenhuber, 2022. "Female labour supply and informal employment in Ecuador," WIDER Working Paper Series wp-2022-47, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    Developing countries; Informality; Labour supply; Sub-Saharan Africa; Taxation;
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