Imposto sobre Trabalho e seu Impacto nos Setores Formal e Informal

Gabriel Ulyssea () and Mauricio Reis

No 1218, Discussion Papers from Instituto de Pesquisa Econômica Aplicada - IPEA

Abstract: This paper aims to analyze the effects of payroll taxes on the Brazilian labor market. For that purpose, we develop a model of two sectors (formal and informal) and two types of workers. The demand for labor is determined by workers? productivity while the supply side is represented by wage curves, which are specific to each sector and qualification group. The parameters of the model are estimated using the data from Pnad 1992-2003. The simulation results show that reducing payroll taxes leads to a significant drop in the informality rate and increases both employment level and earnings.

Pages: 30 pages
Date: 2006-09
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ipe:ipetds:1218

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