Labor supply, taxes and informality / Oferta de trabalho, impostos e informalidade

AUTOR(ES)
DATA DE PUBLICAÇÃO

2010

RESUMO

The informal sector has reached significant levels in developing countries. In Brazil about 50% of jobs are informal and account for nearly 40% of national GDP. The traditional neoclassical growth model does not explain why, given the significant increase in tax rates in the early 90s, Brazilians did not work less. The traditional model predicts a dramatic drop in the number of hours worked, but such a sharp drop is not observed in Brazilian data. The informal sector seems to be a good explanation for this divergence; informal workers do not pay taxes and so the increases in tax rates should have no impact in ones work-leisure decision. The central aim of this dissertation is to model the number of hours the average Brazilian worked between 1986 and 1998. By including the informal sector, the proposed model predicts a less dramatic change in the number of hours worked in the presence of increasing tax rates. This change makes the predicted number of hours worked closer to the actual behavior found in Brazilian data.

ASSUNTO(S)

labor supply impostos taxes horas de trabalho informality trabalho informal

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