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Publicly Provided Private Goods and Informal Labor Supply

Author

Listed:
  • Marcelo Arbex

    () (Department of Economics, University of Windsor)

  • Flavia Chein

    () (Federal University of Juiz de Fora, Brazil)

  • Isabela Furtado

    () (São Paulo School of Economics, Getulio Vargas Foundation)

  • Enlinson Mattos

    () (São Paulo School of Economics, Getulio Vargas Foundation)

Abstract

In this paper we investigate how households time allocations decisions between formal and informal sectors are related to publicly provided goods with and without market substitutes. A simple static public provision model motivates our analysis. Households consume a normal private good and a quasi-private (education) good. Household needs some public utility services to consume the private good and supply labor to formal and informal sectors. Using data from the PNAD (National Household Sample Survey) for the period 2007-2015 we construct indexes of access to three groups of publicly provided goods: (I) basic infrastructure or public utility services, (II) basic education and (III) higher education. Our logit results show a positive effect of access to public education (basic and higher) on the probability of evasion. Differently from public utility services, that affect negatively the probability of evasion, the consumption of these goods present substitute in the private sector. We observe a stronger effect of access to publicly provided basic education comparing with higher education. This result may be related to the different quality of publicly provision of higher and basic education. Tobit results suggest a positive and significant effect only in the case of publicly provided education, i.e., an increase in the access or use of publicly provided education increases the supply of informal labor hours.

Suggested Citation

  • Marcelo Arbex & Flavia Chein & Isabela Furtado & Enlinson Mattos, 2017. "Publicly Provided Private Goods and Informal Labor Supply," Working Papers 1710, University of Windsor, Department of Economics.
  • Handle: RePEc:wis:wpaper:1710
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    File URL: http://web2.uwindsor.ca/economics/RePEc/wis/pdf/1710.pdf
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    References listed on IDEAS

    as
    1. Bouwe R. Dijkstra, 2011. "Good and Bad Equilibria with the Informal Sector," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(4), pages 668-685, December.
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    More about this item

    Keywords

    Education; Public Utility Services; Tax Evasion; Public Provision.;

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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