nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2012‒02‒01
four papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Bureaucratic reform, informal sector and welfare By Chaudhuri, Sarbajit; Mandal, Biswajit
  2. Job Separations, Job loss and Informality in the Russian Labor Market By Hartmut Lehmann; Tiziano Razzolini; Anzelika Zaiceva
  3. Importing Corruption Culture from Overseas: Evidence from Corporate Tax Evasion in the United States By Jason M. DeBacker; Bradley T. Heim; Anh Tran
  4. Simplification of Labor Registration in Argentina: Achievements and Pending Issues By Lucas Ronconi; Jorge Colina

  1. By: Chaudhuri, Sarbajit; Mandal, Biswajit
    Abstract: In this paper we formulate a three-sector general equilibrium model where one sector produces a service or good used as an intermediate input in two other sectors. Intermediate input here resembles bureaucratic (in)efficiency/control, red-tapism etc. in light of these concerns we introduce informal sector where wage is determined through competitive mechanism. We show that informal wage must go up if bureaucratic efficiency increases in general or if informal sector becomes less prone to bureaucracy related menace. However, in the welfare front the eventual impact depends on whether labor reallocation effect can outweigh the tariff revenue effect.
    Keywords: : General equilibrium; Intermediation; Informal sector; Welfare
    JEL: D50 D73 O17 D60
    Date: 2012–01–15
  2. By: Hartmut Lehmann; Tiziano Razzolini; Anzelika Zaiceva
    Abstract: Having unique data we investigate the link between job separations (displacement and quits) and informal employment, which we define in several ways posing the general question whether the burden of informality falls disproportionately on job separators in the Russian labor market. After we have established positive causal effects of displacement and quits on informal employment we analyze whether displaced workers experience more involuntary informal employment than their non-displaced counterparts. Our main results confirm our contention that displacement entraps some of the workers in involuntary informal employment. Those who quit, in turn, experience voluntary informality for the most part, but there seems a minority of quitting workers who end up in involuntary informal jobs. This scenario does not fall on all the workers who separate but predominantly on workers with low human capital. We also pursue the issue of informality persistence and find that informal employment is indeed persistent as some workers churn from one informal job to the next. Our study contributes to the debate in the informality literature regarding segmented versus integrated labor markets. It also contributes to the literature on displacement by establishing informal employment as an important cost of displacement. We also look at the share of undeclared wages in formal jobs and find that these shares are larger for separators than for incumbents, with displaced workers bearing the brunt of this manifestation of informality
    Date: 2012–01
  3. By: Jason M. DeBacker; Bradley T. Heim; Anh Tran
    Abstract: This paper studies how cultural norms and enforcement policies influence illicit corporate activities. Using confidential IRS audit data, we show that corporations with owners from countries with higher corruption norms engage in higher amounts of tax evasion in the U.S. This effect is strong for small corporations and decreases as the size of the corporation increases. In the mid-2000s, the United States implemented several enforcement measures which significantly increased tax compliance. However, we find that these enforcement efforts were less effective in reducing tax evasion by corporations whose owners are from countries with higher corruption norms. This suggests that cultural norms can be a challenge to legal enforcement.
    JEL: D73 H25 M14
    Date: 2012–01
  4. By: Lucas Ronconi; Jorge Colina
    Abstract: This paper describes the reforms aimed at simplifying the administrative procedures for labor registration and the payment of social security contributions that were carried out in Argentina in 2005 and 2007. Analysis of the legislation, as well as a survey conducted among accountants, reveals that although the reforms did reduce the administrative burden, the effect was only partial. By using microdata gathered from household surveys conducted quarterly between 2003 and 2009, and the discontinuities according to company size that the legislation engenders, differences-in-differences coefficients have been estimated regarding the impact of the simplification reforms on the labor market. The results indicate that the simplification reforms had a positive, although limited, effect on the labor registration rate (of approximately two percentage points for all workers and nine percentage points for newly-hired workers), but that there was no effect on employment levels. Finally, policy recommendations are put forward aimed at deepening the administrative simplification process and thereby improving its effectiveness as a labor registration promotion mechanism.
    Keywords: Labor :: Labor Policy, Labor :: Social Security, Labor :: Labor Relations, taxes, the labor market, informality
    JEL: J3 O17 J8
    Date: 2011–10

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