Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125436
Authors: 
Weber, Michael
Year of Publication: 
2015
Citation: 
[Journal:] IZA World of Labor [ISSN:] 2054-9571 [Year:] 2015 [Issue:] 213
Abstract: 
Evidence from transition economies shows that formal work may not pay, particularly for low-wage earners. Synthetic measurements of work disincentives, such as the formalization tax rate or the marginal effective tax rate, confirm a significant positive correlation between these measurements and the probability of informal work. These measures are especially informative for impacts at lower wage levels, where informality is highest. Policymakers who want to increase formal work can use these measurements to determine optimal labor taxation rates for low-wage earners and reform benefit design.
Subjects: 
informal employment
synthetic measurements
tax wedge
tax evasion
formalization tax rate
marginal effective tax rate
JEL: 
H26
J32
O17
Persistent Identifier of the first edition: 
Document Type: 
Article

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