size of the informal economy. There is also evidence that a larger tax wedge increases informality. The tax wedge … with the literature, which identifies labor market regulation and the tax wedge as important drivers of informality. …

Informality often arises from disincentives associated with high taxes and a restrictive regulatory framework in both … reducing labour informality. To the extent that informal businesses also hire informally, there is some room for designing … policies to tackle business informality in conjunction with those aimed at boosting formal labour contracting. Chile is …

regulation. On the other hand informality may reduce the amount of social protection offered to workers. We extend the wage … micro data and evaluate the labor market and welfare effects of policies towards informality. …