Abstract

http://ssrn.com/abstract=1946346
 
 

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Macroeconomic Effects of Taxation on Firms in an Evasion and Informality Environment


Claudia Sánchez-Vela


Universidad Autonoma de Nuevo Leon

Jorge N. Valero-Gil


Universidad Autonoma de Nuevo Leon

October 19, 2011


Abstract:     
In this paper we analyze the effects of two size-dependent policies established for Mexican firms in a context where evasion, informality and transaction costs favor small firms over large ones. To analyze these effects we use a model that simulates the US economy and apply these policies and transaction costs to the model, while allowing for evasion and informality as they are observed in Mexico. Lastly, we compare the resultant simulated economy with data from the Mexican economy and conclude that these policies increase the employment share of small firms. We also study the case when the workers do not fully value mandated benefits and its effects on the workers’ wage and on the economy.

Number of Pages in PDF File: 52

Keywords: size distortions, establishment size, informal economy, evasion, Mexico

JEL Classification: O11, O17, E25

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Date posted: October 20, 2011  

Suggested Citation

Sánchez-Vela, Claudia and Valero-Gil, Jorge N., Macroeconomic Effects of Taxation on Firms in an Evasion and Informality Environment (October 19, 2011). Available at SSRN: http://ssrn.com/abstract=1946346 or http://dx.doi.org/10.2139/ssrn.1946346

Contact Information

Claudia Sánchez-Vela
Universidad Autonoma de Nuevo Leon ( email )
Av Lazaro Cardenas 4600 Ote
Fracc Residencial Las Torres
Monterrey, 64930
Mexico
Jorge N. Valero-Gil (Contact Author)
Universidad Autonoma de Nuevo Leon ( email )
Av Lazaro Cardenas 4600 Ote
Fracc Residencial Las Torres
Monterrey, 64930
Mexico
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