Regulatory governance and the informal economy: cross-national comparisons

Kus, Basak

doi:10.1093/ser/mwq005

Cited by 52 publications

(40 citation statements)

References 21 publications

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“…The view is that de-regulation reduces the informal entrepreneurship. However, there is growing evidence that decreasing the level of state intervention does not result in a formalisation of informal entrepreneurs but quite the opposite, greater levels of informal entrepreneurship (Kus, 2010(Kus, , 2014Williams, 2013bWilliams, , 2014a. As such, this option is not perhaps viable.…”

Section: Move Formal Entrepreneurship Into the Informal Economymentioning

confidence: 99%

Tackling Entrepreneurship in the Informal Sector: An Overview of the Policy Options, Approaches and Measures

Williams

2015

J. Dev. Entrepreneurship

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The aim of this paper is to review the various policy options, approaches and measures that can be used to address informal entrepreneurship. To do this, it firstly reviews four possible policy options, namely taking no action, eradicating informal entrepreneurship, moving formal entrepreneurship into the informal economy, or transforming informal entrepreneurship into formal entrepreneurship. Revealing that transforming informal entrepreneurship into formal entrepreneurship is not only the most viable option but also the approach most commonly adopted by supra-national agencies and national governments, a review is then undertaken of how this can be achieved using either direct controls, which seek to increase the costs of informal entrepreneurship and/or the benefits of formal entrepreneurship, or indirect controls that seek to generate a commitment to compliance and greater self-regulation. It is then revealed how these approaches and their accompanying policy measures are not mutually exclusive and can be combined in various ways, exemplified by the responsive regulation and slippery slope approaches. The outcome is a comprehensive review and evaluation of the various policy options, approaches and measures available to policy-makers for addressing informal entrepreneurship along with some recommendations regarding the way forward.

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Section: Move Formal Entrepreneurship Into the Informal Economymentioning

confidence: 99%

Tackling Entrepreneurship in the Informal Sector: An Overview of the Policy Options, Approaches and Measures

Williams

2015

J. Dev. Entrepreneurship

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“…Focusing solely on the question of tax compliance, while informal sector operators may escape national taxation, they are often burdened by several types of fees, charges and licensing costs paid to local governments 3 Some have argued that the size of the informal sector is related to deliberate government policies and regulations that create barriers to entry and related rents that can be easily appropriated through taxation at low administrative costs (Auriol and Warlters 2005). Others suggest that regulation is related to the size of the informal economy only in countries with effective law enforcement (Kus 2010). (de Mel et al 2010).…”

Section: Defining the Informal Sectormentioning

confidence: 99%

Taxing the Informal Economy: Challenges, Possibilities and Remaining Questions*

Joshi¹,

Prichard

Heady

2013

IDS Working Papers

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The International Centre for Tax and Development is a global policy research network dealing with the political economy of taxation policies and practices in relation to the poorer parts of the world.Our operational objectives are to generate and disseminate relevant knowledge to policymakers and to mobilise knowledge in ways that will widen and deepen public debate about taxation issues within poorer countries. Our ultimate objective is to contribute to development in the poorer parts of the world and help make taxation policies more conducive to pro-poor economic growth and good governance. The ICTD's research strategy and organisational structures are designed to bring about productive interaction between established experts and new stakeholders. A catalogue record for this publication is available from the British Library. All rights reserved. Reproduction, copy, transmission, or translation of any part of this publication may be made only under the following conditions: -with the prior permission of the publisher; or -with a licence from the Copyright Licensing Agency Ltd., 90 Tottenham Court Road, London W1P 9HE, UK, or from another national licensing agency; or -under the terms set out below.This publication is copyright, but may be reproduced by any method without fee for teaching or nonprofit purposes, but not for resale. Formal permission is required for all such uses, but normally will be granted immediately. For copying in any other circumstances, or for reuse in other publications, or for translation or adaptation, prior written permission must be obtained from the publisher and a fee may be payable. SummaryRecent years have witnessed significantly increased attention to the challenge of taxing small businesses in the informal sector. However, much of this recent attention has remained focused on comparatively technical issues of revenue maximisation and policy design. This paper argues that this debate should focus increasingly on the wider development implications of informal sector taxation, as well as the political and institutional barriers to improved performance.When considering the merits of committing scarce resources to taxing small informal sector firms, debate has frequently focused on limited revenue potential, high costs of collection and potentially perverse impacts on small firms. By contrast, recent arguments have increasingly emphasised more indirect benefits of informal taxation in relation to economic growth, tax compliance and governance. These potentially broader benefits are increasingly finding support in recent research, but they are contingent on government support and consequently demand further attention.When we turn our attention away from whether tax authorities should tax small informal businesses towards the challenge of how to do so more effectively, we again argue that a broader frame of analysis is needed. Most existing research has focused on developing less distortionary tax regimes and on tax simplification in order to reduce the costs of compliance. However, w...

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“…Previous studies systematically study cross-national variation in the size of the informal economy, but rely on proxies of the informal economy, such as the size of the service labor force (Evans and Timberlake) or self-employment (Ihrig and Moe, 2001;Loayza and Rigolini, 2011). Based on this limitation in the literature, recent studies use direct and internationally comparable estimates of the size of the informal economy to explain cross-national variation (Djankov and Ramalho, 2009;Ihrig and Moe, 2004;Kus, 2010). This article continues this approach by examining variation in the size of the informal economy across a large cross section of countries from 1999 to 2007 using recently available national estimates of the size of the informal economy (see Schneider et al, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…According to this view, during periods of economic growth and strong labor market performance, the informal sector contracts as informal producers and workers migrate to the formal sector (Hart, 1973;ILO, 1972). The legalist perspective views the informal economy as an unregulated sector composed of smallscale entrepreneurs trying to avoid the economic burden of overt regulation (De Soto, 1989;Kus, 2010;Maloney, 2004). Based on this argument, conditions of overt economic regulation and lax enforcement incentivize informal petty production, which causes the informal economy to expand.…”

Section: Introductionmentioning

confidence: 99%

Peripheral accumulation in the world economy: A cross-national analysis of the informal economy

Roberts

2013

International Journal of Comparative Sociology

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The persistence and growth of the informal economy have puzzled researchers and challenged mainstream explanations of the development of the informal economy. This study utilizes a world-systems approach for explaining cross-national variation in the size of the informal economy for a sample of 74 developing and developed countries observed over a recent 8-year period (1999-2007). According to this approach, the informal economy is a characteristic of peripheral accumulation in the world economy and its development is driven by unequal exchange in international trade and foreign capital penetration. Based on estimates from random and fixed-effects regression models using multiple measures of world-system position, countries in the periphery and semi-periphery of the world economy have larger informal economies than core countries. More importantly, this difference in the development of the informal economy between the core, semi-periphery, and periphery is partially explained by the effects of international trade and foreign direct investment. Overall, the findings indicate that the development and persistence of the informal economy are driven by the structure of the world economy and processes of economic globalization.

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Regulatory governance and the informal economy: cross-national comparisons

Cited by 52 publications

References 21 publications

Tackling Entrepreneurship in the Informal Sector: An Overview of the Policy Options, Approaches and Measures

Tackling Entrepreneurship in the Informal Sector: An Overview of the Policy Options, Approaches and Measures

Taxing the Informal Economy: Challenges, Possibilities and Remaining Questions*

Peripheral accumulation in the world economy: A cross-national analysis of the informal economy

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