Self-employment in developing countries: A search-equilibrium approach

Autor(es)

Narita, Renata

• Tipo de documento: Artigo Científico
• Fonte: REVIEW OF ECONOMIC DYNAMICS; v. 35, p. 1-34, JAN 2020.
• Citações Web of Science: 0

Resumo

This paper develops and estimates a life-cycle on-the-job search model with self- employment that captures labor market stylized facts typical of middle-income developing economies. Workers flow across unemployment, self-employment, formal and informal wage employment. Individuals differ across and within employment sectors in terms of earnings, self-employment ability and transition rates. Counterfactual analysis shows that a flat reduction in payroll taxation increases the share of formal sector workers mainly due to a drop in self-employment. A proportional reduction in payroll taxes improves total welfare by increasing formal sector wages and profits, and allowing for a better allocation of high education workers. Converting to a progressive payroll tax system, equivalent to a flat reduction, is ineffective in reducing informality and leads to a decline in total welfare. (C) 2019 Elsevier Inc. All rights reserved. (AU)

• Processo FAPESP: 13/23045-0 - Informalidade, compensação do trabalhador e bem-estar
• Beneficiário: Renata Del Tedesco Narita
• Modalidade de apoio: Auxílio à Pesquisa - Regular