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dc.titleProductivity, Misallocation, and Special Tax Regimes in the Dominican Republic
dc.contributor.authorAzuero, Rodrigo
dc.contributor.authorBosch, Mariano
dc.contributor.authorCardoza, Marvin
dc.contributor.authorSánchez-Navarro, Dennis
dc.contributor.orgunitFiscal Management Division
dc.coverageDominican Republic
dc.coverageLatin America and the Caribbean
dc.coverageThe Caribbean
dc.date.available2019-09-19T00:00:00
dc.date.issue2019-09-19T00:00:00
dc.description.abstractThis paper advances understanding of the relationship between tax policy and productivity, taking advantage of unique data from the Dominican Republic to document a significant negative impact of tax regulations on total factor productivity (TFP). It begins by estimating productivity using administrative records provided by the tax authorities. Then, it estimates the extent to which misallocation of resources might be limiting TFP using the Hsieh and Klenow (HK) methodology. Finally, it analyzes the tax regulation and provides suggestive evidence about how some provisions might be contributing to the misallocation of resources observed in the Dominican Republic. The paper finds that if misallocation of resources is eliminated from the economy, TFP will increase by a factor of 3.5. Several regulations generate discontinuities in the average rate of taxation, and tax reductions designed for small businesses are actually used by large and unproductive firms, which may be contributing to the overall misallocation observed in the Dominican Republic.
dc.format.extent83
dc.identifier.doihttp://dx.doi.org/10.18235/0001888
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Productivity_Misallocation_and_Special_Tax_Regimes_in_the_Dominican_Republic_en.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectProductivity Growth
dc.subjectTax Policy
dc.subjectFiscal Policy
dc.subjectTax Evasion
dc.subjectIncome Tax
dc.subject.jelcodeH30 - Fiscal Policies and Behavior of Economic Agents: General
dc.subject.jelcodeH26 - Tax Evasion and Avoidance
dc.subject.jelcodeL51 - Economics of Regulation
dc.subject.jelcodeJ80 - Labor Standards: National and International: General
dc.subject.jelcodeL11 - Production, Pricing, and Market Structure • Size Distribution of Firms
dc.subject.keywordsfirm size; general fiscal policies; labor regulation; productivity; tax evasion and avoidance
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01050
idb.operationRG-E1578
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