Tax Policies and Informality in South Africa
| Autor: | Riccardo Magnani, Eliane El Badaoui |
|---|---|
| Přispěvatelé: | EconomiX, Université Paris Nanterre (UPN)-Centre National de la Recherche Scientifique (CNRS) |
| Jazyk: | angličtina |
| Rok vydání: | 2020 |
| Předmět: |
Labour economics
Inequality 050204 development studies media_common.quotation_subject Geography Planning and Development jel:C68 Development Tax reform Flat rate jel:J22 jel:H24 Income distribution 0502 economics and business Economics 050207 economics 10. No inequality media_common Tax Reform Informal Sector Labor Supply CGE Model Microsimulation South Africa Informal sector Poverty 05 social sciences 1. No poverty [SHS.ECO]Humanities and Social Sciences/Economics and Finance Labour supply 8. Economic growth Unemployment [No keyword available] jel:O17 |
| Zdroj: | Journal of International Development Journal of International Development, Wiley-Blackwell, 2020, 32, pp.267-301 Journal of International Development, Wiley-Blackwell, 2020, 32 (3), pp.267-301. ⟨10.1002/jid.3416⟩ Journal of International Development, 2020, 32 (3), pp.267-301. ⟨10.1002/jid.3416⟩ |
| ISSN: | 0954-1748 1099-1328 |
| Popis: | We use a micro-macro simulation model to evaluate the effects of labor income tax policies in South Africa. The country is characterized by a high unemployment rate while employment in the informal sector is relatively low. Our approach is based on the aggregation of the preferences of individuals who choose among (i) working in the formal sector,(ii) working in the informal sector, and (iii) not working. We quantify the effects of different tax policies on the individual's labor supply choices (formal/informal employment, work/leisure) and at the macro level (GDP, equilibrium wages, size of the informal sector, and unemployment rate). We further analyze the effects in terms of income distribution, poverty and inequality. We find that the introduction of a negative income tax system reduces inequality and poverty but, at the same time, discourages people from participating in the labor market and working in the formal sector and, consequently worsens the equitye efficiency trade-off. We find however that the equity-efficiency trade-off can be improved by introducing (i) a (revenue-neutral) tax system which combines a sufficiently high at rate (25%) and lump-sum transfer paid only to formal workers; (ii) an expansionary policy (a reduction in total taxes or an increase in public expenditures). Interestingly, even though they increase the informal sector, these reforms reduce inequality and poverty through a reduction in the level of unemployment. |
| Databáze: | OpenAIRE |
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