Informality, Inequality and Profit Rate

摘要

Using two novel datasets of the size of the informal economy and income inequality, this study examines the effect of informality on income and wage inequality with special attention to the rates of profit. Covering 86 countries for 1960-2016, the study shows that informality and the rates of profit are positively associated with income inequality; however, the positive impact of profit rate on income inequality decreases as the size of informal economy increases.