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| Author: | Fortin, B. Marceau, N. Savard, L. |
| Title: | Taxation, wage controls and the informal sector. |
| Journal: | Journal of Public Economics
1997 : NOV, VOL. 66:2, p. 293-312 |
| Index terms: | TAXATION DEVELOPING COUNTRIES EQUILIBRIUM ANALYSIS INFORMAL ECONOMY CAMEROON |
| Language: | eng |
| Abstract: | The authors sudy the effects of taxation and wage controls in a developing economy (Cameroon). The build a model with firm heterogeneity, in which a formal and an informal sector endogenously emerge in some productive branches of the economy. Based on the assumption that the marginal cost of tax and regulation evasion increases with the distribution of firms size. Three forms of dualism - scale, wage and evasion - consistent with market segmentation are obtained. The model accounts for the presence of waiting unemployment that seems particularly pervasive in urban regions. Various reforms of the tax and regulation system are simulated and their effects on the extent of the informal sector are analyzed. |
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