Heterogeneous Firms and the Impact of Government Policy on Welfare and Informality

Caterina Mendicino; Mauricio Prado

doi:10.1016/j.econlet.2014.04.018

Heterogeneous Firms and the Impact of Government Policy on Welfare and Informality

Caterina Mendicino, Mauricio Prado

Department of Economics

Research output: Contribution to journal › Journal article › Research › peer-review

Abstract

We analyze the formality benefits through productivity-enhancing public goods. We document that: benefits from formality matter for firms’ optimal decisions; there is a disconnect between the objectives of maximizing formality versus welfare; this disconnect is mitigated under higher formality benefits.

Original language	English
Journal	Economics Letters
Volume	124
Issue number	1
Pages (from-to)	151-156
ISSN	0165-1765
DOIs	https://doi.org/10.1016/j.econlet.2014.04.018
Publication status	Published - 2014

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10.1016/j.econlet.2014.04.018

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Cite this

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title = "Heterogeneous Firms and the Impact of Government Policy on Welfare and Informality",

abstract = "We analyze the formality benefits through productivity-enhancing public goods. We document that: benefits from formality matter for firms{\textquoteright} optimal decisions; there is a disconnect between the objectives of maximizing formality versus welfare; this disconnect is mitigated under higher formality benefits.",

keywords = "Firm heterogeneity, Production complementarity, Taxation, Enforcement, Regulation",

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AU - Prado, Mauricio

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AB - We analyze the formality benefits through productivity-enhancing public goods. We document that: benefits from formality matter for firms’ optimal decisions; there is a disconnect between the objectives of maximizing formality versus welfare; this disconnect is mitigated under higher formality benefits.

KW - Firm heterogeneity

KW - Production complementarity

KW - Taxation

KW - Enforcement

KW - Regulation

U2 - 10.1016/j.econlet.2014.04.018

DO - 10.1016/j.econlet.2014.04.018

M3 - Journal article

VL - 124

SP - 151

EP - 156

JO - Economics Letters

JF - Economics Letters

SN - 0165-1765

IS - 1

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