Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279210 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10461
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Vast literature is available covering main Informal Economy (IE) causes and consequences for Latin America and Caribbean (LAC), but its size estimation has been mainly limited to worldwide models applied to the region. This paper proposes a MIMIC Base Model using a data set composed by 41 countries in LAC, in which both inequality and total factor productivity are introduced on top of traditional variables. Modelling results on IE estimates for LAC countries that are at par with the literature. When compared with a model using data from 188 countries, inequality has an impact ten-fold higher in the level of informality. Results suggest the importance of tailored data set selection when modelling IE with MIMIC.
Subjects: 
Informal Economy (IE). MIMIC (Multiple Indicators Multiple Causes)
shadow economy
underground economy
non-observed economy
inequality
informality
tax burden
quality of state institutions
regulations
governance
GINI coefficient
TFP
Latin America and Caribbean (LAC)
JEL: 
D78
E26
H26
H32
O17
O54
Document Type: 
Working Paper
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