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Economic Informality : Causes, Costs, and Policies - A Literature Survey

  • Ana Maria Oviedo
  • Mark R. Thomas
  • Kamer Karakurum-Ozdemir
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    In this survey the author assemble recent theoretical and empirical advances in the literature on economic informality, analyzing the causes and costs of informality in developed and developing economies. In accordance with recent evidence, the author discusses the nature and the roots of informal economic activity across countries distinguishing between informality as the result of 'exclusion' and 'exit.' The author then provides an extensive review of recent international experience with policies aimed at reducing informality, in particular policies that facilitate the formalization process, create a framework for the transition from informality to formality, lend support to newly created firms, reduce or eliminate inconsistencies across regulation and government agencies, increase information flows, and increase enforcement.

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    File URL: https://openknowledge.worldbank.org/bitstream/handle/10986/5917/503600PUB0Box3101OFFICIAL0USE0ONLY1.pdf?sequence=1
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    This book is provided by The World Bank in its series World Bank Publications with number 5917 and published in 2009.
    ISBN: 978-0-8213-7996-7
    Handle: RePEc:wbk:wbpubs:5917
    Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Web page: https://openknowledge.worldbank.org
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    1. McKenzie, David & Sakho, Yaye Seynabou, 2007. "Does it pay firms to register for taxes ? the impact of formality on firm profitability," Policy Research Working Paper Series 4449, The World Bank.
    2. Johannes P. Jütting & Jante Parlevliet & Theodora Xenogiani, 2008. "Informal Employment Re-loaded," OECD Development Centre Working Papers 266, OECD Publishing.
    3. Klarita G�rxhani, 2004. "The Informal Sector in Developed and Less Developed Countries: A Literature Survey," Public Choice, Springer, vol. 120(3_4), pages 267-300, 09.
    4. Mortensen, Dale T & Pissarides, Christopher A, 1994. "Job Creation and Job Destruction in the Theory of Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 397-415, July.
    5. Benno Torgler & Friedrich Schneider, 2007. "Shadow Economy, Tax Morale, Governance and Institutional Quality: A Panel Analysis," School of Economics and Finance Discussion Papers and Working Papers Series 210, School of Economics and Finance, Queensland University of Technology.
    6. Loayza, Norman V., 1996. "The economics of the informal sector: a simple model and some empirical evidence from Latin America," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 129-162, December.
    7. Kenyon, Thomas, 2007. "A framework for thinking about enterprise formalization policies in developing countries," Policy Research Working Paper Series 4235, The World Bank.
    8. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    9. Trevor Breusch, 2005. "Estimating the Underground Economy using MIMIC Models," Econometrics 0507003, EconWPA, revised 25 Jul 2005.
    10. James Albrecht & Lucas Navarro & Susan Vroman, 2009. "The Effects of Labour Market Policies in an Economy with an Informal Sector," Economic Journal, Royal Economic Society, vol. 119(539), pages 1105-1129, 07.
    11. Bosch, Mariano & Maloney, William, 2008. "Cyclical movements in unemployment and informality in developing countries," Policy Research Working Paper Series 4648, The World Bank.
    12. Blanchard, Olivier J & Giavazzi, Francesco, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labour Markets," CEPR Discussion Papers 2713, C.E.P.R. Discussion Papers.
    13. Mauricio Cárdenas & Sandra Rozo V., 2007. "La informalidad empresarial y sus consecuencias: ¿Son los CAE una solución?," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009191, FEDESARROLLO.
    14. World Bank, 2007. "Economic Performance in Latin America and the Caribbean : A Microeconomic Perspective," World Bank Other Operational Studies 7857, The World Bank.
    15. Pablo Fajnzylber & William Maloney & Gabriel Montes Rojas, 2006. "Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico," World Bank Economic Review, World Bank Group, vol. 20(3), pages 389-419.
    16. Kaplan, David S. & Piedra, Eduardo & Seira, Enrique, 2011. "Entry regulation and business start-ups: Evidence from Mexico," Journal of Public Economics, Elsevier, vol. 95(11), pages 1501-1515.
    17. Fugazza, Marco & Jacques, Jean-Francois, 2004. "Labor market institutions, taxation and the underground economy," Journal of Public Economics, Elsevier, vol. 88(1-2), pages 395-418, January.
    18. Aureo de Paula & Jose A Sheinkman, 2007. "The Informal Sector," Levine's Bibliography 122247000000001663, UCLA Department of Economics.
    19. David Kaplan & Eduardo Piedra & Enrique Seira, 2007. "Are Burdensome Registration Procedures an Important Barrier on Firm Creation? Evidence from Mexico," Working Papers 0701, Centro de Investigacion Economica, ITAM.
    20. Loayza, Norman V. & Rigolini, Jamele, 2006. "Informality trends and cycles," Policy Research Working Paper Series 4078, The World Bank.
    21. Bruhn, Miriam, 2008. "License to sell : the effect of business registration reform on entrepreneurial activity in Mexico," Policy Research Working Paper Series 4538, The World Bank.
    22. Gatti, Roberta & Honorati, Maddalena, 2007. "Informality among Formal Firms: Firm-level, Cross-country Evidence on Tax Compliance and Access to Credit," CEPR Discussion Papers 6597, C.E.P.R. Discussion Papers.
    23. Lucas Ronconi, 2010. "Enforcement and Compliance with Labor Regulations," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 63(4), pages 719-736, July.
    24. Mauricio Santa María S. & Sandra Rozo V., 2008. "Informalidad empresarial en Colombia: alternativas para impulsar la productividd, el empleo y los ingresos," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009189, FEDESARROLLO.
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