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Informality and exogenous regulations in regional economies

Author

Listed:
  • Laudo M Ogura

    (Grand Valley State University)

Abstract

Higher taxation typically requires greater enforcement of formality to prevent tax evasion. However, in low productivity regional economies, exogenous regulations can severely constrain the size of the formal sector regardless of local government policies. As a result, tax rates can be higher, but possibly with weaker enforcement compared to an autonomous economy case. In addition, if there is significant labor mobility across borders, regional governments must take into account how the migration of different types of workers affects the regional economy.

Suggested Citation

  • Laudo M Ogura, 2018. "Informality and exogenous regulations in regional economies," Economics Bulletin, AccessEcon, vol. 38(2), pages 892-900.
    • Handle: RePEc:ebl:ecbull:eb-17-00952
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I2-P87.pdf
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    References listed on IDEAS

    as
    1. Marcelo Arbex & Enlinson Mattos & Laudo M. Ogura, 2013. "Taxing Hard-to-Tax Markets," Working Papers 1305, University of Windsor, Department of Economics.
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    4. Dabla-Norris, Era & Gradstein, Mark & Inchauste, Gabriela, 2008. "What causes firms to hide output? The determinants of informality," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 1-27, February.
    5. Antunes, Antonio R. & Cavalcanti, Tiago V. de V., 2007. "Start up costs, limited enforcement, and the hidden economy," European Economic Review, Elsevier, vol. 51(1), pages 203-224, January.
    6. Zoë Kuehn, 2014. "Tax Rates, Governance, And The Informal Economy In High-Income Countries," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 405-430, January.
    7. Amaral, Pedro S. & Quintin, Erwan, 2006. "A competitive model of the informal sector," Journal of Monetary Economics, Elsevier, vol. 53(7), pages 1541-1553, October.
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    Cited by:

    1. Maiti,Dibyendu & Khari,Bhavna, 2023. "Digitalisation, Governance and the Informal Sector," IDE Discussion Papers 898, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. João Ricardo Faria & Laudo Ogura & Mauricio Prado & Christopher J. Boudreaux, 2023. "Government investments and entrepreneurship," Small Business Economics, Springer, vol. 61(4), pages 1657-1670, December.

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    More about this item

    Keywords

    Informal sector; Tax evasion; Production regulations; Regional economies; Labor mobility.;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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