Informality, Inequality, and Profit Rates

Abstract

In this empirical work, we utilized two datasets based on the size of the informal economy as well as income inequality among 86 countries from the period of 1960-2016. Our goal for this work was to analyze the effect of informality on income inequality with a particular emphasis on profit rates. The study showed that informality and profit rates are positively associated with income equality but the positive impact of profit rate on income inequality does decrease as the size of the informal sector increases.

Joseph Bourgeois | Economics, History, and Political Science | Faculty Sponsor Adem Elveren