The Tax Elasticity of Formal Work in Sub-Saharan African Countries

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dc.contributor.authorMcKay, Andy
dc.contributor.authorPirttilä, Jukka
dc.contributor.authorSchimanski, Caroline
dc.date.accessioned2024-02-05T10:32:08Z
dc.date.available2024-02-05T10:32:08Z
dc.date.issued2024-01
dc.description.abstractAbstract When seeking to increase their tax revenues, policy makers face a likely tradeoff between decreasing personal income tax rates (making formalizing more attractive and potentially contributing to revenue) and alternatively raising tax rates (potentially slowing down the formalization of the economy if people prefer informal employment). Evidence on formal versus informal earnings and job characteristics in different sectors is limited in African countries, and in particular very little is known about the impact of tax changes on the extent of informality. This paper therefore estimates the personal income tax responsiveness of the extensive margin of formality, i.e. the propensity to be a formal as opposed to an informal worker, for Ghana, Rwanda, Tanzania, and Uganda, using repeated cross-sections of household data and applying grouping estimator techniques. Perhaps because of labour demand constraints and other frictions, the paper finds non-significant relations between the formal employment share and the formal-informal earnings differences.en_US
dc.identifier.citationMcKay, Andy, Jukka Pirttilä, and Caroline Schimanski. 'The Tax Elasticity of Formal Work in Sub-Saharan African Countries', The Journal of Development Studies, vol. 60/no. 2, (2024), pp. 217-244.en_US
dc.identifier.issnISSN 0022-0388
dc.identifier.issnEISSN 1743-9140
dc.identifier.urihttps://nru.uncst.go.ug/handle/123456789/9396
dc.language.isoenen_US
dc.publisherTaylor & Francisen_US
dc.subjectDeveloping countries; Sub-Saharan Africa; taxation; labour supply; informalityen_US
dc.titleThe Tax Elasticity of Formal Work in Sub-Saharan African Countriesen_US
dc.typeArticleen_US
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