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on Informal and Underground Economics |
| By: | Bethencourt, Carlos; Kunze, Lars |
| Abstract: | This paper proposes a theoretical model to account for the most relevant micro- and macroeconomic empirical facts in the tax evasion literature. To do so, we integrate tax morale into a dynamic overlapping generations model of capital income tax evasion. Tax morale is modeled as a social norm for tax compliance. It is shown that accounting for such nonpecuniary costs of evasion may not only explain (i) why some taxpayers never evade even if the gamble is profitable, and (ii) how a higher tax rate can increase evasion, but also that (iii) the share of evaded taxes over GDP decreases with the stage of economic development and (iv) that tax morale is positively correlated with the level of GDP per capita as suggested by recent empirical evidence. Finally, a higher tax rate increases aggregate evasion as well as the number of evaders in the economy when taxpayers decisions are interdependent. |
| Keywords: | tax evasion, social norms, overlapping generations, economic growth |
| JEL: | D91 H26 Z13 |
| Date: | 2013–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:48427&r=iue |
| By: | Carlo Fiorio; Stefano Iacus; Alessandro Santoro |
| Abstract: | Income tax evasion by small rms has been seldom investigated mostly because of lack of data. In this paper we use a large data set produced by the Italian Revenue Agency for this project to analyse a recent policy to contrast business income tax evasion. Since 1998 Italy has adopted a method to audit small businesses (Studi di Settore), which denes the probability of a tax audit based on presumptive and reported levels of sales. In 2007 a letter campaign was implemented by the Italian Revenue Agency aimed at reducing manipulation of reports by threatening that if the "anomaly" was repeated with the 2008 tax declaration, the probability of a thorough tax audit would have drastically increased. By using dierence in dierence with matching methods on a sample of about 50,000 treated firms and 95,000 controls, we find that the letter campaign had a positive and statistically signicant average effect on treated firms. A cost-benet analysis of the policy suggests that the letter campaign generated a net increase of revenues of about 140 million euros. |
| Keywords: | Business Taxation, Tax Compliance, Coarsened Exact Matching, Studi di Settore |
| JEL: | H26 H25 C13 |
| Date: | 2013–07 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:251&r=iue |
| By: | Hoseini, M. (Tilburg University, Center for Economic Research) |
| Abstract: | Abstract: This paper models and empirically tests a self-enforcing feature of the value added tax (VAT) which is absent in the theory: An incentive that makes formal traders buy from suppliers who pay VAT too. In addition, it explores how the government can deploy this feature to enforce VAT more efficiently by reallocating the enforcement spendings among different sectors. The results suggest that the government should identify the non-compliant firms more strictly in the backwardly linked sectors {which buy their inputs from the others{ and focus on revealing within-firm information. In contrast, in forwardly linked industries, the government should zoom on double checking the transaction records with the corresponding input credit claims. Empirical evidence from Indian service sector enterprises strongly confirms the existence of VAT self-enforcement effect, even in the absence of government punishments. |
| Keywords: | Value-added tax;Informality;Tax enforcement;Linkage analysis. |
| JEL: | H26 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2013036&r=iue |
| By: | Akyeampong, Emmanuel; Fofack, Hippolyte |
| Abstract: | This paper draws on history, anthropology, and economics to examine the dynamics and extent of women's contribution to growth and economic development in post-colonial Africa. The paper investigates the paradox of increased female enrollment in education and the persistence of gender discrimination in labor force participation; it also considers the overwhelming importance of the informal economy in female economic activity. The first axis the paper studies is whether reducing educational gender gaps enhances growth in per capita gross domestic product and reduces female fertility rates and infant mortality. The question is, why would some African countries resist this pattern? The second axis examines agriculture and home production. Women's economic activities in the informal economy largely represent the commercialization of domestic skills and dependence on social networks. The shunting of female production to the informal sector in the male-dominated colonial economy is easy to understand, but why has the informal economy persisted where female production is concerned well beyond the colonial period? The paper attempts to explain these trajectories by using country case studies on Senegal, Botswana, and Kenya. Although women's contribution to growth and economic development seems to be positive and significant in predominantly Christian and mineral-rich economies, it is more constrained in pronounced Muslim dominated countries and agrarian economies. At the same time, impressive uniform growth in informal sector production in recent years suggests that occupational job segregation and gender inequality remain strong across the region, despite the apparent loosening of traditional norms and cultural beliefs, most notably illustrated by the reduction in educational gender gaps and increased female labor force participation rates. |
| Keywords: | Gender and Development,Population Policies,Primary Education,Gender and Law,Achieving Shared Growth |
| Date: | 2013–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6537&r=iue |
| By: | Bernardo Queiroz (Cedeplar-UFMG) |
| Abstract: | In this paper I investigate labor force participation of older males in Latin America. The empirical analysis is divided in two parts. First, I use household survey data from twenty-three (23) Latin American and the Caribbean countries, from around 2005, to perform a cross-country analysis on labor force participation focusing on differences rural and urban status, formal and informal relation to the labor market and coverage of public pension programs. I also use the data to show different patterns by income level and stage of the demographic transition to describe historical trends in labor force participation rates of older workers. The second part of the paper, I use data on the 23 Latin American countries to investigate the effects of economic development and social security system in the labor force participation of the elderly for the past 30 years. |
| Keywords: | labor force participation, economic development elderly, social security, retirement, Latin America |
| JEL: | J10 J11 J14 J18 |
| URL: | http://d.repec.org/n?u=RePEc:cdp:texdis:td490&r=iue |
| By: | Gallagher, Mary; Giles, John; Park, Albert; Wang, Meiyan |
| Abstract: | This paper presents empirical evidence from household and firm survey data collected during 2009-2010 on the implementation of the 2008 Labor Contract Law and its effects on China's workers. The government and local labor bureaus have made substantial efforts to enforce the provisions of the new law, which has likely contributed to reversing a trend toward increasing informalization of the urban labor market. Enforcement of the law, however, varies substantially across cities. The paper analyzes the determinants of worker satisfaction with the enforcement of the law, the propensity of workers to have a labor contract, workers'awareness of the content of the law, and their likelihood of initiating disputes. The paper finds that all of these factors are highly correlated with the level of education, especially for migrants. Although higher labor costs may have had a negative impact on manufacturing employment growth, this has not led to an overall increase in aggregate unemployment or prevented the rapid growth of real wages. Less progress has been made in increasing social insurance coverage, although signing a labor contract is more likely to be associated with participation in social insurance programs than in the past, particularly for migrant workers. |
| Keywords: | Labor Markets,Labor Policies,Labor Standards,Work&Working Conditions,Labor Law |
| Date: | 2013–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6542&r=iue |