We study the impact on the size of the informal sector of a tax levied on formal workers, and transfers that may be distributed to both formal and informal workers alike. We build a search model that features an informal sector and we calibrate it to data from Mexico. We investigate whether...

There has been increasing concern that the difficulty of obtaining firm operation licences in developing countries may decrease firm creation and increase informality. We estimate the effect on new firm creation/registration of a program that speeds up firm registration procedures and makes them...