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Coming out of the shadows? Estimating the impact of bureaucracy simplification and tax cut on formality in Brazilian microenterprises

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  • Monteiro, Joana C.M.
  • Assunção, Juliano J.

Abstract

This paper evaluates the impact of a program of bureaucracy simplification and tax reduction on formality among Brazilian microenterprises — the SIMPLES program. We document an increase of 13 percentage points in formal licensing among retail firms created after the program when compared to firms in ineligible sectors. The impact on retailers is robust to a series of tests. We find no impact on construction, transportation, services and manufacturing sectors.

Suggested Citation

  • Monteiro, Joana C.M. & Assunção, Juliano J., 2012. "Coming out of the shadows? Estimating the impact of bureaucracy simplification and tax cut on formality in Brazilian microenterprises," Journal of Development Economics, Elsevier, vol. 99(1), pages 105-115.
    • Handle: RePEc:eee:deveco:v:99:y:2012:i:1:p:105-115
    DOI: 10.1016/j.jdeveco.2011.10.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Informal economy; Tax legislation; Bureaucracy;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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