The effect of payroll taxes on employment and wages under high labor informality

IZA Journal of Labor & Development

Table 2 Comparing moments in the model and the data

Moment	Data	Model
Establishment size and employment distributions
Mean size sector 1	10.14	10.11
Mean size sector 2	6.15	6.18
Mean size, +50 sector 1	174.21	174.05
Mean size, +50 sector 2	191.89	191.25
Employment share, +50 in sector 2	0.27	0.21
Informality
Share of own-account in sector 1	0.34	0.34
Share of own-account in sector 2	0.38	0.39
Share of informal salaried workers	0.39	0.40
Other Aggregates
VAT Revenue/GDP	0.057	0.057
Potential VAT Revenue/GDP	0.077	0.077
NCSI subsidies/GDP	0.016	0.016

Notes: Mean size is the average number of workers per establishment, excluding the own-account. “Employment share, +50 in sector 2” is the fraction of workers (excluding the own-account) in that sector that performs activities in establishments with more than 50 workers. The “share of own-account in sector j” is the fraction of own-account workers in that sector. “Potential VAT revenue” assumes that all establishments (excluding the own-account) in sector 2 pay the VAT fully.