Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/336428 
Year of Publication: 
2025
Citation: 
[Journal:] Latin American Journal of Central Banking (LAJCB) [ISSN:] 2666-1438 [Volume:] 6 [Issue:] 3 [Article No.:] 100147 [Year:] 2025 [Pages:] 1-12
Publisher: 
Elsevier, Amsterdam
Abstract: 
What are the aggregate consequences of policies that target adopting more efficient technologies in an economy with a large informal sector? Using a heterogeneous agents model with endogenous occupation choice between workers and formal and informal entrepreneurs and calibrated to Mexico, we found that in economies with a large informal sector, a decrease in the overall tax rate increases by more the adoption of advanced technologies than in economies with a low informal sector. Furthermore, the burden on government revenues is lower in a highly informal economy. In addition, we find that such policies are more efficient than those that target adopting more advanced technologies because they tackle two distortionary problems: the informality rate and the low adoption of advanced technologies. Such policies become relevant, as we estimate that climate change can reduce aggregate production by up to 6.6% in the long-run.
Subjects: 
Climate change
Heterogeneous producers
Informality
Technology adoption
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.