What Causes Firms to Hide Output? the Determinants of Informality

In many developing countries, a significant part of economic activity takes place in the informal sector. Earlier work has examined the determinants of the size of the informal sector, focusing separately on factors such as tax and regulation burden, financial market development, and the quality of...

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Bibliographic Details
Main Author: Inchauste, Gabriela
Other Authors: Dabla-Norris, Era, Gradstein, Mark
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2005
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a What Causes Firms to Hide Output? the Determinants of Informality  |c Gabriela Inchauste, Mark Gradstein, Era Dabla-Norris 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2005 
300 |a 33 pages 
653 |a Credit 
653 |a Tax Evasion and Avoidance 
653 |a Shadow Economy 
653 |a Finance 
653 |a Public finance & taxation 
653 |a Productivity 
653 |a Monetary economics 
653 |a Formal and Informal Sectors 
653 |a Fiscal Policies and Behavior of Economic Agents: Firm 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Industrial productivity 
653 |a Bureaucracy 
653 |a Legal support in revenue administration 
653 |a Firm Performance: Size, Diversification, and Scope 
653 |a Institutional Arrangements 
653 |a Administrative Processes in Public Organizations 
653 |a Macroeconomics: Production 
653 |a Corruption 
653 |a Taxation, Subsidies, and Revenue: General 
653 |a Criminology 
653 |a White-collar crime 
653 |a Financial Markets and the Macroeconomy 
653 |a Macroeconomics 
653 |a Financial services industry 
653 |a Financial sector development 
653 |a Public Finance 
653 |a Money and Monetary Policy 
653 |a Finance: General 
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653 |a Production and Operations Management 
653 |a Corporate crime 
700 1 |a Dabla-Norris, Era 
700 1 |a Gradstein, Mark 
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520 |a In many developing countries, a significant part of economic activity takes place in the informal sector. Earlier work has examined the determinants of the size of the informal sector, focusing separately on factors such as tax and regulation burden, financial market development, and the quality of the legal system. We revisit this issue by using an integrated dataset which contains rich information on all these aspects. Testing the channels affecting the degree of informality, we find evidence that all previously identified factors indeed play a role in driving informality. In particular, and consistent with the suggested theoretical model, we find support for the significance of the quality of the legal system