Beware of Informality

Ana Corbacho, Vicente Fretes Cibils and Eduardo Lora
Additional contact information
Ana Corbacho: Columbia University
Vicente Fretes Cibils: North Carolina State University

Chapter 4 in More than Revenue, 2013, pp 65-78 from Palgrave Macmillan

Abstract: Abstract The words “taxes” and “informality” often occur together, and for good reason. In its currently most widely accepted definition, “informality” is failure by individuals or businesses to comply with regular tax obligations (and other regulations). Informality can hamper tax collection, but its consequences do not end there. Informal workers who are not covered by social security services lack protection against the risks of illness and economic insecurity in old age, and may not enjoy other benefits that their peers who are employed by formal firms receive. Meanwhile, firms that operate in the informal sector tend to operate on a very small scale, which in practice eliminates the risk of penalties. But operating on such a small scale may mean sacrificing productivity gains and possibly limiting access to productive resources, from credit to technology. Thus informality has costs for the economy and society that go far beyond loss of tax revenue.

Keywords: Minimum Wage; Latin American Country; Informal Sector; Social Security Contribution; Informal Worker (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:pal:palchp:978-1-137-31597-7_4

Ordering information: This item can be ordered from
http://www.palgrave.com/9781137315977

DOI: 10.1057/9781137315977_4

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla (sonal.shukla@springer.com) and Springer Nature Abstracting and Indexing (indexing@springernature.com).