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American Economic Journal: Applied Economics: Vol. 3 No. 4 (October 2011)
AEJ: Applied Volume. 3, Issue 4 | 
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AEJ: Applied Forthcoming Articles
Informal Taxation
Article Citation
Olken, Benjamin A., and
Monica Singhal. 2011. "Informal Taxation."
American Economic Journal: Applied Economics,
3(4): 1-28.
DOI: 10.1257/app.3.4.1
DOI: 10.1257/app.3.4.1
Abstract
Informal payments are a frequently overlooked source of local public finance in developing countries. We use microdata from ten countries to establish stylized facts on the magnitude, form, and distributional
implications of this "informal taxation." Informal taxation is widespread, particularly in rural areas, with substantial in-kind labor
payments. The wealthy pay more, but pay less in percentage terms, and informal taxes are more regressive than formal taxes. Failing to include informal taxation underestimates household tax burdens and revenue decentralization in developing countries. We discuss various
explanations for and implications of these observed stylized facts. (JEL H24, H27, O12, O17, O23)
Article Full-Text Access
Full-text Article
Additional Materials
Download Data Set (4.10 MB) | Online Appendix (192.21 KB)
Authors
Olken, Benjamin A. (MIT)
Singhal, Monica (Harvard U)
Singhal, Monica (Harvard U)
JEL Classifications
H24: Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
H27: Taxation, Subsidies, and Revenues: Other Sources of Revenue
O12: Microeconomic Analyses of Economic Development
O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O23: Fiscal and Monetary Policy in Development
H27: Taxation, Subsidies, and Revenues: Other Sources of Revenue
O12: Microeconomic Analyses of Economic Development
O17: Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
O23: Fiscal and Monetary Policy in Development
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