Income Stratification within the Informal Sector: A Heterogeneous-Agent Incomplete-Markets Approach for Emerging Economies

This proposal develops a heterogeneous-agent incomplete-markets model in continuous time, calibrated to Argentina, to study the macroeconomic consequences of income stratification within the informal sector. Rather than treating informal workers as a homogeneous low productivity group, we explicitly distinguish between high-income and low-income informal agents, a distinction grounded in Argentine microdata. The framework is used to analyze the distributional and macroeconomic effects of tax formalization policies, with particular focus on reforms to Argentina's monotributo regime. Preliminary simulations confirm the project's computational feasibility.