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Public financing with financial frictions and underground economy

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dc.affiliation.dptoUC3M. Departamento de Economíaes
dc.contributor.authorErosa, Andrés
dc.contributor.authorFuster, Luisa
dc.contributor.authorMartinez, Tomás R.
dc.contributor.editorUniversidad Carlos III de Madrid. Departamento de Economíaes
dc.date.accessioned2021-07-08T11:12:36Z
dc.date.available2021-07-08T10:17:55Z
dc.date.issued2021-04-27
dc.description.abstractWhat are the aggregate effects of informality in a financially constrained economy? We develop and calibrate an entrepreneurship model to data on matched employer-employee from both formal and informal sectors in Brazil. The model distinguishes between informality on the business side (extensive margin) and the informal hiring by formal firms (intensive margin). We find that when informality is eliminated along both margins, aggregate output increases 9.3%, capital 14.7%, TFP 5.4%, and tax revenue37%. The output and TFP increases would be much larger if informality were only eliminated on the extensive margin, a result that supports the view that the informal economy can play a positive role in an economy with financial frictions. Finally, we find that the output cost of financing social security in our baseline model is about twice as large as the one in an economy with no frictions.en
dc.identifier.issn2340-5031
dc.identifier.urihttps://hdl.handle.net/10016/32495
dc.identifier.uxxiDT/0000001917
dc.language.isoeng
dc.relation.ispartofseriesWorking paper. Economics
dc.relation.ispartofseries21-04
dc.rightsAtribución-NoComercial-SinDerivadas 3.0 España
dc.rights.accessRightsopen access
dc.rights.urihttp://creativecommons.org/licenses/by-nc-nd/3.0/es/
dc.subject.ecienciaEconomíaes
dc.subject.jelE22
dc.subject.jelE26
dc.subject.jelH20
dc.subject.jelH55
dc.subject.jelL26
dc.subject.jelO16
dc.subject.otherOccupational Choiceen
dc.subject.otherInformalityen
dc.subject.otherFinancial Frictionsen
dc.subject.otherSocial Securityen
dc.subject.otherTax Revenueen
dc.titlePublic financing with financial frictions and underground economyen
dc.typeworking paper*
dc.type.hasVersionSMUR*
dspace.entity.typePublication
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