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Education and informality: what welfare effects are at stake?

Author

Listed:
  • Andrea Doneschi

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

  • Rossana Patrón

    (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)

Abstract

Although the wage distribution is central to analysing inequality issues, the provision of public services destined for t he poor can make an essential difference in evaluating inequality in welfare rather than in income. Whereas raising taxes to fund public services would lead to a distributional conflict along with an efficiency loss, lower informality levels as a source of government revenue would make everyone better off. The simulation results suggest that, given the important size of the informal sector in developing countries, government intervention to reduce informality has great potential as an efficient redistributional tool.

Suggested Citation

  • Andrea Doneschi & Rossana Patrón, 2012. "Education and informality: what welfare effects are at stake?," Documentos de Trabajo (working papers) 0512, Department of Economics - dECON.
    • Handle: RePEc:ude:wpaper:0512
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    File URL: https://hdl.handle.net/20.500.12008/2228
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    References listed on IDEAS

    as
    1. Koujianou Goldberg, Pinelopi & Pavcnik, Nina, 2003. "The response of the informal sector to trade liberalization," Journal of Development Economics, Elsevier, vol. 72(2), pages 463-496, December.
    2. Alberto Chong & Mark Gradstein, 2007. "Inequality and Institutions," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 454-465, August.
    3. Kar, Saibal & Marjit, Sugata, 2001. "Informal sector in general equilibrium: welfare effects of trade policy reforms," International Review of Economics & Finance, Elsevier, vol. 10(3), pages 289-300, July.
    4. Davis Lewis S, 2007. "Explaining the Evidence on Inequality and Growth: Informality and Redistribution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 7(1), pages 1-35, January.
    5. repec:idb:brikps:79498 is not listed on IDEAS
    6. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    informality; education; inequality;
    All these keywords.

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

    Statistics

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