productivity and none at all looking at the impact on total factor productivity. This is an issue which needs to be explored further. On the worker side, there is little evidence on the impact of payroll taxes on labor force participation. In addition, as mentioned above, the effects on wage inequality and earnings inequality are different and this should be explored further, but there is a single paper looking at the impact of enforcement on income inequality. 6.2. Unexplored Impact of Income Taxes While there are holes in the literature on the impacts of payroll taxes on firms and workers, there is less evidence on the impact of income taxes. The existing evidence on the impact of income taxes focuses solely on OECD countries and analyses that include income taxes tend to also include payroll taxes or social security contributions, and also sometimes consumption taxes, as total labor taxes or total taxes. Past evidence on the impact of income taxes has focused mostly on employment levels, unemployment and labor force participation in OECD countries. On the other hand, there is only one paper looking at the impact on informality, one paper looking at the impact of income taxes on investment, and one paper looking at wages using data from industrialized countries. On the other hand, there are a number of papers that examine the effect of income taxes on self-employment and entrepreneurship. Income taxes can affect job creation, firm entry, productivity, and capital intensity by increasing the reservation wage at which individuals are willing to work. Similarly, worker turnover can be affected by changes in income taxes.
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