nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2011‒10‒15
eleven papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The Financial Flows of the Transnational Crime: Some Preliminary Empirical Results By Friedrich Schneider
  2. Crime and Unemployment: Evidence from Europe By Duha T. Altindag
  3. Long term unemployment and violent crimes - using post-2000 data to reinvestigate the relationship between unemployment and crime By Almén, Daniel; Nordin, Martin
  4. Smoke Signals and Mixed Messages: Medical Marijuana & Drug Policy Signalling Effects By Niko De Silva; Benno Torgler
  5. Food, hunger and ethics By Srijit Mishra
  6. CHILLING EFFECTS: The influence of partner incarceration on political participation By Naomi F. Sugie
  7. A Multivariate Analysis Of The Space Syntax Output For The Definition Of Strata In Street Security Surveys By Enrico di Bella; Luca Persico; Matteo Corsi
  8. Unemployment insurance and informality in developing countries By David Bardey; Fernando Jaramillo
  9. Socio-Spatial Implications of Street Market Regulation Policy: The Case of Ferias Libres in Santiago de Chile By Lissette Aliaga Linares
  10. Varieties of cross-class coalitions in the politics of dualization: Insights from the case of vocational training in Germany By Busemeyer, Marius R.
  11. Separating the Opposing Effects of Bilateral Tax Treaties By Bruce A. Blonigen; Lindsay Oldenski; Nicholas Sly

  1. By: Friedrich Schneider
    Abstract: Until 2008, the growth of the world economy was quite strong and improved the economic well-being all over the globe, but this development was also accompanied by some risks. One of them is transnational crime, which has shown a remarkable increase in the last 20 years3. This raises the following two questions: (1) How is transnational crime financed, and what do we know about this financing? (2) What economic implications does transnational crime have? In this contribution question (2) will be very briefly answered, however the main focus lies on providing a more detailed answer on the financing of transnational crime (question 1). Additionally a detailed analysis of the finances of transnational crime is crucial to reduce their financial options, so that the basis of their operations is at least limited. Such an analysis is another goal of this chapter. My paper is structured as follows: section 2 provides a literature review on the kinds of transnational crime financing. Section 3 shows the infiltration of transnational crime into the economic system. In section 4 some conclusions and policy recommendations are drawn.
    Date: 2011
  2. By: Duha T. Altindag
    Abstract: I investigate the impact of unemployment on crime using a country-level panel data set from Europe that contains consistently-measured crime statistics. Unemployment has a positive influence on property crimes. Using earthquakes, industrial accidents and the exchange rate movements as instruments for the unemployment rate, I find that 2SLS point estimates are larger than OLS estimates.
    Keywords: Crime; Europe; Unemployment; Earthquakes; Industrial accidents; Instrumental variables
    JEL: K42 J00
    Date: 2011–10
  3. By: Almén, Daniel (Department of Economics, Lund University); Nordin, Martin (Department of Economics, Lund University)
    Abstract: Abstract This study reinvestigates the relationship between unemployment and crime. By being the first study to use long-term unemployment, it contributes unique findings. Moreover, with a Swedish panel consisting of 288 municipalities and annual data from 1997 to 2009, the relationship is investigated for the first time with aggregate post-2000 data. The results show that long-term unemployment exhibits a strong association with violent crimes in addition to property crimes, highlighting a potential gap in the conventional theories of economics of crime. The point-estimate of long-term unemployment for violent crimes is between 1.5 and 4, and for property crimes it is between 1.3 and 2.3. Thus, long-term unemployment identifies a marginal group for committing crimes, particularly violent crimes, better than total unemployment does. Long-term unemployment plausibly creates a feeling of alienation that fosters violent and other non-rational behaviors.
    Keywords: crime; unemployment; long-term unemployment
    JEL: J20 K14 K42
    Date: 2011–10–07
  4. By: Niko De Silva (QUT); Benno Torgler (QUT)
    Abstract: Liberal drug policy reform is often criticized for 'sending the wrong message', particularly to youth. Reform opponents argue that liberal policies such as decriminalisation and medical marijuana laws will cause marijuana to be perceived as less risky and lead to an increase in use. We seek to test this claim empirically, exploiting the timing and unique properties of state level medical marijuana laws in the US to isolate policy signalling effects. We use survey-derived state-level estimates of youths' marijuana risk-perceptions and use prevalence, and find evidence of signalling effects on aggregate risk-perceptions of marijuana use that correspond to the introduction of medical marijuana laws. These effects, however, do not conform to what reform opponents predict - medical marijuana provisions appear to send the 'right' message. Further, we find no robust effects on non-medical marijuana use.
    Keywords: Medical marijuana, drug policy, ballot initiatives, policy signalling
    JEL: K14 K42 I18 Z19
    Date: 2011–09–12
  5. By: Srijit Mishra (Indira Gandhi Institute of Development Research)
    Abstract: Management of hunger has to look into issues of availability, accessibility and adequacy. Posing it from an ethical perspective the paper argues out in favour of right to food. But, for this to happen, the state has to come up with an appropriate and effective bill on food and nutrition security, address the issue of inadequate provisioning of storage space by state agencies leading to rotting of foodgrains - a criminal waste when people are dying of hunger, and rely on a bottom-up approach involving the community that complements the top-down administrative structure to identify poor and reduce both exclusion and inclusion errors in targeting.
    Keywords: Bottom-up, cash transfers, exclusion and inclusion errors, foodgrains, Mahatma Gandhi, nutrition adequacy, poverty, Rawls, right to food, targeting, top-down, unique identification
    JEL: D63 D78 I38
    Date: 2011–09
  6. By: Naomi F. Sugie (Princeton University)
    Abstract: The prevalence of criminal justice involvement among low-income minority men has had many negative and often unforeseen consequences for ex-felons, their families, and their neighborhoods. One consequence felon disenfranchisement laws and low levels of political engagement among ex-felons more generally has measurably altered the outcomes of state and national elections. At the same time, studies in political science more generally provide strong empirical evidence that spouses and partners influence an individual‘s political behavior. Drawing on these two areas of research, this paper considers whether political disengagement among ex-felons has had negative consequences for the voting behavior and political engagement of partners. Using data from the Fragile Families and Child Wellbeing Survey, the results find that partner incarceration is negatively associated with voting and political involvement. This association is entirely mediated by a partner‘s voting behaviors and his beliefs about his voting eligibility, regardless of state disenfranchisement laws. The political disengagement of not only ex-felons but also their partners has important implications for theories of social exclusion and the governance of marginalized groups. A large and growing population of the politically disengaged, economically marginal, and socially excluded likely has critical repercussions for US politics, democracy, and our social contract.
    Keywords: disenfranchisement, voting, prison, minority men, families
    JEL: D10 I39 J12 J13 I21
    Date: 2011–07
  7. By: Enrico di Bella (DIEM, University of Genoa, Italy); Luca Persico (DIEM, University of Genoa, Italy); Matteo Corsi (Associazione Kallipolis, Trieste, Italy)
    Abstract: Although the connection between crime and urban layout is generally evident, surveys inquiring that relationship are often facing two different problems: areas with high criminality are often inhabited by partially elusive populations (being stowaways) and the urban structure (e.g. length and width of streets) quickly changes even after a few corners. In this work a combination of two techniques well known in their specific field is proposed to define a simple two-stages sampling design. Space Syntax is a set of measurements which are done on the topographic maps of a town with the division of all the roads into segments, called axes. Using multivariate techniques, these axes can be classified on the basis of a homogeneity criterion obtaining the strata for a two-stages sampling design
    Keywords: Factor Analysis, Geodetic networks, Street security surveys, Space Syntax, Urban axes
    JEL: O18
    Date: 2011–09
  8. By: David Bardey; Fernando Jaramillo
    Abstract: ABSTRACT: We analyze whether the introduction of unemployment insurance (UI hereafter) benefits in developing countries would reduce the effort made by unemployed to secure a new job in the formal sector. We show that one shot UI benefits unambiguously increase the effort to secure a new job in the formal sector. The relative strength of income/substitution effects only determine how leisure and informal activities are affected. Consequently, our (partial equilibrium) analysis reveals that short term UI benefits in developing countries do not reduce incentives to secure a new formal job and therefore cannot be interpreted as a subsidy to the informal sector.
    Date: 2011–10–03
  9. By: Lissette Aliaga Linares
    Abstract: Unlike in most Latin American cities, street vendors organized in farmers’ markets popularly known as ferias libres in Santiago de Chile, gained legal recognition early in the twentieth century. Since then, comunas, or local municipalities, have provided vendors with individual licenses that stipulate the place and time of operations, and have defined a clear set of rules regarding customer service. However, this early legal recognition has not necessarily overcome the embedded conflict over the economic use of public space. As supermarkets become spatially positioned along the main streets within easy access of the city’s transportation system, feriantes, or licensed street vendors, are being relocated in less profitable areas. Moreover, coleros, or unlicensed vendors, are still flourishing despite efforts to restrict their numbers.
    Keywords: informal sector, regulation, farmers’ markets, competition
    Date: 2011
  10. By: Busemeyer, Marius R.
    Abstract: The literature notes an increasing trend towards labor market stratification and dualization in coordinated market economies such as Germany. Labor market insiders and insider-oriented cross-class coalitions are usually identified as the driving forces behind these developments. This paper adds to this perspective by identifying different varieties of cross-class coalitions. On the basis of three case studies from the field of vocational training policy in Germany, two kinds of coalitions are identified: a conservative cross-class coalition of unions and employers that is against state intrusion into the domain of firm-based training, and a segmentalist cross-class coalition of social democratic government actors and business that is promoting an incremental flexibilization of the system against union opposition. In an alternating manner, both coalitions block the large-scale change that would be the most effective in countering dualization. Hence, they tacitly support dualization by drift. -- Die einschlägige Literatur befindet, dass in koordinierten Marktwirtschaften wie zum Beispiel Deutschland die Stratifizierung und Dualisierung von Arbeitsmärkten zunimmt. Als Triebkräfte hinter diesen Prozessen werden häufig Arbeitsmarkt-'Insider' und auf die Interessen dieser Insider hin orientierte klassenübergreifende Koalitionen aus Arbeitgebern und Arbeitnehmern identifiziert. Dieses Papier entwickelt eine neue Perspektive auf diesen Zusammenhang, indem es zeigt, dass es unterschiedliche Variationen von klassenübergreifenden Koalitionen gibt. Auf der Grundlage von drei Fallstudien aus der deutschen Berufsbildungspolitik werden zwei Koalitionstypen identifiziert: (1) eine konservative Koalition aus Arbeitgebern und Gewerkschaften, die gegen das Eindringen des Staates und für die Bewahrung der Eigenständigkeit der betrieblichen Ausbildung eintritt; (2) eine segmentalistische Koalition aus Teilen der Arbeitgeberschaft und sozialdemokratischen Regierungsmitgliedern, die gegen den Widerstand der Gewerkschaften eine inkrementelle Flexibilisierung und Modernisierung des Systems betreibt. In wechselseitiger Weise verhindern beide Koalitionen die Durchsetzung großer Systemänderungen, obwohl diese am effektivsten wären, um dem Trend zur Dualisierung entgegenzuwirken.
    Date: 2011
  11. By: Bruce A. Blonigen; Lindsay Oldenski; Nicholas Sly
    Abstract: Bilateral tax treaties (BTT) are intended to promote foreign direct investment and foreign affiliate activity through double taxation relief. However, BTTs also typically contain provisions that facilitate sharing of tax information between countries intended to curtail tax avoidance by multinational firms. These provisions should disproportionately affect firms that intensively use inputs for which an arms-length price is easily observed, since strategic transfer practices that manipulate tax liabilities are no longer effective with information sharing between countries. Using BEA firm-level data we are able to separately estimate the impacts of double-taxation relief and sharing of tax information on investment behavior of US multinational firms. We find a significant positive effect of new tax treaties on foreign affiliate activity between member nations that is offset (and even reversed) the more a firm relies on inputs traded on an organized exchange (i.e., inputs for which the arms-length price is easily observed). We find these opposing BTT effects for both the intensive margin (sales of existing affiliates) and the extensive margin (entry of new affiliates).
    JEL: F21 F23 H25
    Date: 2011–10

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