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On the Effects of Formalization on Taxes and Wages: Panel Evidence from Vietnam

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  • Amadou Boly

Abstract

Based on a unique panel dataset consisting of both formal and informal firms surveyed every other year from 2005 to 2013, this paper explores the benefits of formalization to the government and firm employees in Vietnam. We find that formalization benefits the government by increasing the amount and the likelihood of tax payments. Formalization also increases the wage level paid by firms that shift out of the informal sector, as well as the share of wages in value added.

Suggested Citation

  • Amadou Boly, 2015. "On the Effects of Formalization on Taxes and Wages: Panel Evidence from Vietnam," WIDER Working Paper Series wp-2015-042, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-2015-042
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    File URL: https://www.wider.unu.edu/sites/default/files/wp2015-042.pdf
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    References listed on IDEAS

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    Cited by:

    1. Do, Tien Kim Thi & Van Vu, Huong, 2021. "Does formalization increase firm investment in human capital? New evidence from Vietnam," Finance Research Letters, Elsevier, vol. 42(C).

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