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Author
Russo Francesco Flaviano (University of Naples Federico II, Napoli, Italy)
Title
Informality: the Doorstep of the Legal System
Source
Open Economics, 2018, vol. 1, iss. 1, s. 49-70, bibliogr. 52 poz.
Keyword
Przedsiębiorczość, Przedsiębiorstwo typu start-up, Regulacje prawne, System prawny
Entrepreneurship, Startup, Legal regulations, Legal system
Note
JEL: O17, L51
summ.
Abstract
Many entrepreneurs work informally because it is costly to start and run a business legally. Using a dynamic model of industry equilibrium, I show that the costs of the legal system can explain the cross country variability of the size of the informal economy. The model implies that the business start-up costs are more important than taxes and labor market regulations. Small, less productive, entrepreneurs, facing high entry costs, start informally, waiting to become more productive before legalizing. Informality is often the doorstep of the legal system.(original abstract)
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Bibliography
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ISSN
2451-3458
Language
eng
URI / DOI
https://doi.org/10.1515/openec-2017-0004
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