Inequality and informality

Alberto Chong, Mark Gradstein

Producción científica: Contribución a una revistaArtículo de revista revisión exhaustiva

104 Citas (Scopus)


This paper presents theory and evidence on the determinants of the size of the informal sector. We propose a simple theoretical model in which it is positively related to income inequality, more so under weak institutions, and is negatively related to the economy's wealth. These predictions are then empirically validated using different proxies of the size of the informal sector, income inequality, and institutional quality. The results are shown to be robust with respect to a variety of econometric specifications. We also find that government interventions through regulations lose much of its robustness in the presence of the above factors.
Idioma originalInglés
Páginas (desde-hasta)159-179
Número de páginas21
PublicaciónJournal of Public Economics
EstadoPublicada - 1 feb. 2007
Publicado de forma externa

Palabras clave

  • Inequality
  • Informal sector
  • Institutional quality
  • Shadow economy


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