TY  - JOUR
AU  - Olken,Benjamin A.
AU  - Singhal,Monica
TI  - Informal Taxation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15221
PY  - 2009
Y2  - August 2009
UR  - http://www.nber.org/papers/w15221
L1  - http://www.nber.org/papers/w15221.pdf
N1  - Author contact info:
Benjamin A. Olken
Department of Economics
MIT
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/588-1437
Fax: 617/868-2742
E-Mail: bolken@mit.edu

Monica Singhal
Harvard University
JFK School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/496-5062
Fax: 617/496-6372
E-Mail: monica_singhal@harvard.edu
AB  - 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 propose a simple model of information and enforcement constraints that parsimoniously explains the patterns in the data.
ER  -