The DOI matches its Crossref record; 25 of the 25 references it cites were found in a registry or an index.
What causes firms to hide output? The determinants of informality
Open accessAbstract
Abstract In many developing countries, a significant part of economic activity takes place in the informal sector. Earlier work has examined the determinants of the size of the informal sector, focusing separately on factors such as tax and regulation burden, financial market development, and the quality of the legal system. We revisit this issue by using an integrated data set which contains information on all these aspects. Building on a simple analytical framework, we test the channels affecting the degree of informality. We find that the quality of the legal framework is crucially important in determining the size of the informal sector, whereas the significance of taxes, regulations, and financial constraints is reduced in the context of a well functioning legal system, consistent with the presented model. Additionally, firm size is negatively correlated with the propensity to go informal; finance constraints tend to induce informality among smaller firms but not among large firms, whereas legal obstacles induce informality among larger firms.
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Cites
La Porta, R., Lopez‐de‐Silanes, F., Shleifer, A., & Vishny, R. W. (1998) · Journal of Political Economy · doi:10.1086/250042 · Cited by 18,025
Legal Determinants of External Finance
LA PORTA, R., LOPEZ‐DE‐SILANES, F., SHLEIFER, A., & VISHNY, R. W. (1997) · The Journal of Finance · doi:10.1111/j.1540-6261.1997.tb02727.x · Cited by 9,783
Income tax evasion: a theoretical analysis
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Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2002) · The Quarterly Journal of Economics · doi:10.1162/003355302753399436 · Cited by 3,956 · cited 1×
“Djankov, S., R. La Porta, F. Lopez-de-Silanes, and A. Shleifer, 2002, “The Regulation of Entry,” Quarterly Journal of Economics, Vol. 117, pp. 1–37.”
Glaeser, E. L., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2004) · Journal of Economic Growth · doi:10.1023/b:joeg.0000038933.16398.ed · Cited by 3,926
On the Size Distribution of Business Firms
Lucas, R. E. (1978) · The Bell Journal of Economics · doi:10.2307/3003596 · Cited by 3,236
Shadow Economies: Size, Causes, and Consequences
Schneider, F., & Enste, D. H. (2000) · Journal of Economic Literature · doi:10.1257/jel.38.1.77 · Cited by 3,024
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Legal Determinants of External Finance
Porta, R. L., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. W. (1997) · The Journal of Finance · doi:10.2307/2329518 · Cited by 2,031
Cited by
How Does Financial Sector Development Improve Tax Revenue Mobilization for Developing Countries?
Lompo, A. A. B. (2024) · Comparative Economic Studies · doi:10.1057/s41294-023-00207-9 · Cited by 13
Metadata
- Authors
- Dabla-Norris, E., Gradstein, M., & Inchauste, G.
- Venue
- Journal of Development Economics
- Publisher
- Elsevier BV
- Published
- 2008-02
- Volume
- 85
- Issue
- 1-2
- Pages
- 1-27
- ISSN
- 0304-3878 (ISSN-L)
- OpenAlex
- W3125115975
- Cited by
- 429
- References
- 25
- FWCI
- 21.00
- Type
- journal article
- Language
- en
- Open access
- green
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