A1 - [Ulyssea 2020] - Informality: Causes and Consequences for Development
ANALYSIS OF ARTICLE The Article provides a comprehensive analysis of contemporary literature on the subject. Size matters, as informal firms tend to be smaller; once they grow, they get increased pressure to formalize, whereas to get access to credit, whereas the value chain (vendors, Customers) lead the firm to do so. Formality entry costs, ongoing costs (e.g., lower taxes) have limited impact, and enforcement has higher impact. Effects on the firm productivity are not clear. For the worker, the trade-off between labor regulations / social security and informality maybe tackled with education and a redesign of social security. Unemployment insurance serves to define the reserve utility tied to formalization decisions. SUMMARY OF ARTICLE (provides an overview of the Article, with copy & paste of contents, aiming to summarize its contents). Author provides a definition of margins of informality [Ulyssea 2018]: Extensive margin, based on whether firms register an...