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The Effect of Firm-Size Dependent Policies on the Economy: The Case of the Repecos Law in Mexico

Author

Listed:
  • Claudia Sánchez-Vela
  • Jorge N. Valero-Gil

Abstract

This paper analyzes the effects of a firm-size dependent law, on the Mexican economy which includes a small taxpayers' regime known in Mexico as the Repecos regime. It looks for effects on macroeconomic variables and on the industrial structure, on the proportion of small firms in the economy, which are originated in such regime. It uses a general equilibrium model calibrated on the U.S. economy and applies an environment of high taxes on labor and high tax evasion, characteristic of the Mexican economy, so that their effects can be distinguished from those of the Repecos regime.

Suggested Citation

  • Claudia Sánchez-Vela & Jorge N. Valero-Gil, 2011. "The Effect of Firm-Size Dependent Policies on the Economy: The Case of the Repecos Law in Mexico," IDB Publications (Working Papers) 4549, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:4549
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    References listed on IDEAS

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    1. Nezih Guner & Gustavo Ventura & Xu Yi, 2008. "Macroeconomic Implications of Size-Dependent Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 721-744, October.
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    5. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, Oxford University Press, vol. 124(4), pages 1403-1448.
    6. Marcouiller, Douglas & Ruiz de Castilla, Veronica & Woodruff, Christopher, 1997. "Formal Measures of the Informal-Sector Wage Gap in Mexico, El Salvador, and Peru," Economic Development and Cultural Change, University of Chicago Press, vol. 45(2), pages 367-392, January.
    7. Diego Restuccia & Richard Rogerson, 2008. "Policy Distortions and Aggregate Productivity with Heterogeneous Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 707-720, October.
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    Cited by:

    1. Chang-Tai Hsieh & Benjamin A. Olken, 2014. "The Missing "Missing Middle"," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 89-108, Summer.

    More about this item

    Keywords

    Financial Sector; Small taxpayers; size distortions; Establishment size; Legal effects;

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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