Working Papers

The Effects of Tax Enforcement on Average Firm Size and Aggregate Productivity Paper Appendix
How does tax enforcement affect average firm size and total factor productivity (TFP)? To answer this question, I develop a quantitative model with informality where informal entrepreneurs do not pay taxes but face a probability of detection increasing in firm size. Stricter tax enforcement results in lower informality and affects average firm size and TFP through two mechanisms: as tax enforcement becomes stricter, fewer relatively unproductive agents choose to be entrepreneurs, and fewer entrepreneurs choose to operate in the informal sector. I calibrate the model using Brazilian data. A counterfactual tax enforcement reducing the informality rate by 6 percentage points accounts for 9% and 28% of the observed differences in TFP and average firm size between Brazil and a weighted average of the six largest other Latin American economies.

Measuring Informal GDP Using Survey Data Paper
This paper estimates the share of informal GDP in 26 developing countries over a period that spans up to 2004–2023. The focus is on the concept of legal informality, defined as the activities of enterprises that are not formally registered. I propose a simple framework that formally characterizes informal GDP. I use data from various sources, including the World Bank Enterprise Survey and the International Labour Organization (ILO), to match the conditions derived from the framework. The resulting informality series conform to patterns documented in previous research, such as a negative correlation with GDP per capita and mild anticyclical behavior. Because I adopt a narrower definition of informality, the estimated levels tend to be lower than those reported in previous cross-country studies.