TY  - RPRT
        AU  - Basu, Arnab K.
AU  - Chau, Nancy H.
AU  - Siddique, Zahra
        TI  - Tax Evasion, Minimum Wage Non-Compliance and Informality
        PY  - 2011/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 6228
        UR  - https://www.iza.org/index.php/publications/dp6228
        AB  - We study the impact of tax and minimum wage reforms on the incidence of informality. To gauge the incidence of informality, we use measures of the extent of tax evasion, the extent of minimum wage non-compliance, and the size of the informal workforce. Our approach allows us to examine (i) the distinction between determinants of firm-level reported wage distribution and actual wage distribution, (ii) the complementarity of tax and minimum wage enforcement, (iii) the impact that a minimum wage reform has on tax and minimum wage compliance, and (iv) the impact that a tax policy reform has on tax and minimum wage compliance. We conclude with the design of optimal minimum wage and tax policies (even in the complete absence of minimum wage enforcement). We do so based on two objectives derived from popular concerns associated with an unchecked expansion of informality: tax revenue maximization, and poverty alleviation among workers.
        KW  - tax evasion
KW  - minimum wage reform
KW  - flat tax reform
KW  - poverty
KW  - informality
        ER  -