Informality and exogenous regulations in regional economies

Laudo Ogura

Economics Bulletin, 2018, vol. 38, issue 2, 892-900

Abstract: Higher taxation typically requires greater enforcement of formality to prevent tax evasion. However, in low productivity regional economies, exogenous regulations can severely constrain the size of the formal sector regardless of local government policies. As a result, tax rates can be higher, but possibly with weaker enforcement compared to an autonomous economy case. In addition, if there is significant labor mobility across borders, regional governments must take into account how the migration of different types of workers affects the regional economy.

Keywords: Informal sector; Tax evasion; Production regulations; Regional economies; Labor mobility. (search for similar items in EconPapers)
JEL-codes: H2 O1 (search for similar items in EconPapers)
Date: 2018-04-28
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Citations: View citations in EconPapers (3)

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