Tax Policies and Informality in South Africa

Eliane El Badaoui and Riccardo Magnani

Journal of International Development, 2020, vol. 32, issue 3, 267-301

Abstract: Using a micro–macro simulation approach, we evaluate the effects of different tax policies in South Africa. The country is characterised by a high unemployment rate, while the informal sector remains relatively small. The effects of the simulated tax policies are quantified at the macro level, on the individual's labour supply choices, and on income distribution, inequality and poverty. We find that the equity‐efficiency trade‐off can be improved by introducing a system combining a sufficiently high flat rate and a lump‐sum transfer paid only to formal workers. Interestingly, even though it increases the informal sector, this reform reduces inequality and poverty through a reduction in unemployment. © 2019 John Wiley & Sons, Ltd.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1002/jid.3416

Related works:
Working Paper: Tax Policies and Informality in South Africa (2020)
Working Paper: Tax Policies and Informality in South Africa (2015)
Working Paper: Tax Policies and Informality in South Africa (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:jintdv:v:32:y:2020:i:3:p:267-301

Access Statistics for this article

Journal of International Development is currently edited by Paul Mosley and Hazel Johnson

More articles in Journal of International Development from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley Content Delivery ().