IDEAS home Printed from https://ideas.repec.org/a/iza/izawol/journl2017n345.html
   My bibliography  Save this article

Do payroll tax cuts boost formal jobs in developing countries?

Author

Listed:
  • Carmen Pagés

    (Inter-American Development Bank, USA, and IZA, Germany)

Abstract

Informal employment accounts for more than half of total employment in Latin America and the Caribbean, and an even higher percentage in Africa and South Asia. It is associated with lack of social insurance, low tax collection, and low productivity jobs. Lowering payroll taxes is a potential lever to increase formal employment and extend social insurance coverage among the labor force. However, the effects of tax cuts vary across countries, often resulting in large wage shifts but relatively small employment effects. Cutting payroll taxes requires levying other taxes to compensate for lost revenue, which may be difficult in developing economies.

Suggested Citation

  • Carmen Pagés, 2017. "Do payroll tax cuts boost formal jobs in developing countries?," IZA World of Labor, Institute of Labor Economics (IZA), pages 345-345, March.
    • Handle: RePEc:iza:izawol:journl:2017:n:345
    as

    Download full text from publisher

    File URL: http://wol.iza.org/uploads/articles/345/pdfs/Do-payroll-tax-cuts-boost-formal-jobs-in-developing-countries.pdf
    Download Restriction: no
    File URL: http://wol.iza.org/articles/Do-payroll-tax-cuts-boost-formal-jobs-in-developing-countries
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    payroll taxes; formal employment; wage shifts; developing countries;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izawol:journl:2017:n:345. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Institute of Labor Economics (IZA) (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.