nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2012‒05‒15
eight papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. Persistence of informality in a developing country By Jhon James Mora; Juan Muro
  2. Protecting Workers against Unemployment in Latin America and the Caribbean: Evidence from Argentina By Martín Gonzalez Rozada; Lucas Ronconi; Hernan Ruffo
  3. Unemployment in Bolivia: Risks and Labor Market Policies By Werner Hernani; Maria Villegas; Ernesto Yanez
  4. Indian Labour Law and its Impact on Unemployment, 1970-2006: A leximetric study By Deakin, S.; Sarkar, P.
  5. Tax Avoidance, Human Capital Accumulation and Economic Growth By María Jesús Freire-Serén; Judith Panadés i Martí
  6. How has mobile banking stimulated financial development in Africa? By Simplice A , Asongu
  7. Foreign exchange regulatory framework and characteristics of the Argentine exchange market regarding the transfer of funds from and to foreign countries By Miguel Pesce
  8. Comparative analysis of bilateral memoranda on anti-human trafficking cooperation between Thailand and three neighboring countries : what do the origin and the destination states agree upon? By Yamada, Miwa

  1. By: Jhon James Mora; Juan Muro
    Abstract: Informality is a common phenomenon in developing countries and an unusual one in industrialized countries. The persistence of informal employment is indicative of the impossibility of moving out of this status for a certain period of time. Using pseudo panel data, empirical evidence is presented to show that this phenomenon occurs in a developing country like Colombia where education helps mitigate said persistent occurrence. The authors also present evidence that a minimum salary increase does not only result in increased informality, but also increases the persistence of informality. This kind of evidence can be used for discussing the persistence of informality in other developing countries.
    Date: 2012–02–29
  2. By: Martín Gonzalez Rozada; Lucas Ronconi; Hernan Ruffo
    Abstract: This paper takes advantage of several reforms that provide time and cross sectional variation to identify the effects of unemployment insurance and severance payments on the duration of unemployment and on the separation probability in Argentina. Administrative data permits analysis of the duration of unemployment of covered spells with detailed information about transfers and their duration, while household surveys permit the study of separation probability and transitions to informal jobs, which are not observed in administrative data. It is found that unemployment duration increases significantly when unemployment insurance transfers are higher or are provided for a longer period; the effects of severance pay on unemployment duration are less robust. On the other hand, higher severance pay is found to reduce separation probability, while unemployment insurance transfers have a positive but small effect on separations.
    JEL: I38 J64 J65 J68
    Date: 2011–12
  3. By: Werner Hernani; Maria Villegas; Ernesto Yanez
    Abstract: This paper attempts to evaluate the effectiveness of Bolivia’s labor market institutions, particularly the Plan Nacional de Empleo de Emergencia (PLANE). It is found that unemployment as conventionally defined may not be the most important problem in Bolivia’s labor market, as the non-salaried market is always an alternative. While un- employment durations and unemployment scarring consequences are relatively low, labor market regulations and labor market programs do not help to increase the size of the formal market, apparently as a result of Bolivia’s rigid labor markets and labor policies based mainly on temporary employment programs. Such programs, however, may have helped to smooth consumption. Given the country’s high level of infor- mality, protection policies are second best to active policies specifically designed to increase the productivity/employability of vulnerable populations.
    JEL: J08 J21 J64
    Date: 2011–12
  4. By: Deakin, S.; Sarkar, P.
    Abstract: We analyse a recently developed leximetric dataset on Indian labour law over the period 1970 to 2006. Indian labour law is seen to be highly protective of workers' interests by international standards, particularly in the area of dismissal regulation. We undertake a time-series econometric analysis to estimate the impact of the strengthening of labour laws on unemployment and industrial output in the formal economy. We find no evidence that pro-worker labour legislation leads to unemployment or industrial stagnation. Rather, pro-worker labour laws are associated with low unemployment, with the direction of causality running from unemployment and output to labour regulation.
    Keywords: slabour law, unemployment, India
    JEL: K31 J08 J50 J60 J83
    Date: 2011–12
  5. By: María Jesús Freire-Serén; Judith Panadés i Martí
    Abstract: Human capital accumulation may negatively affect economic growth by increasing tax avoidance and reducing effective tax rates and productive public investment. This paper analyzes how the endogenous feedback between human capital accumulation and tax avoidance affects economic growth and macroeconomic dynamics. Our findings show that this interaction produces remarkable growth and welfare effects.
    Keywords: tax avoidance, tax non-compliance, Economic growth
    JEL: E62 H26 O30 O40 O41
    Date: 2011–12
  6. By: Simplice A , Asongu
    Abstract: In the first empirical assessment of the incidence of mobile banking on financial intermediary development in Africa, we use two definitions of the financial system: the traditional IFS (2008) and Asongu (2011) measures of financial sector importance. When the conception of a financial system is based only on banks and other financial institution (IFS, 2008), mobile banking has a negative incidence on traditional financial intermediary dynamics of depth, activity and size. However, when a previously missing informal-financial sector component is integrated into the definition (Asongu, 2011), mobile-banking has a positive incidence on informal financial intermediary development. Three major implications result from the findings. (1) There is a growing role of informal finance in developing countries. (2) The incidence of the burgeoning phenomenon of mobile-banking cannot be effectively assessed at a macroeconomic level by traditional financial development indicators. (3) It is a wake-up call for scholarly research on informal financial intermediary development indicators which will oriented monetary policy; since a great chunk of the monetary base(M0) in less developed countries is now captured by mobile-banking.
    Keywords: Banking; Mobile Phones; Shadow Economy; Financial Development; Africa
    JEL: O17 E00 O33 D60 G20
    Date: 2012–05–04
  7. By: Miguel Pesce (Central Bank of Argentina)
    Abstract: The purpose of this document is to prove that the establishment in Argentina of regulations and records for exchange market transactions has a positive externality with respect to the prevention and control of asset laundering and potential terrorist financing, thus making this type of criminal transactions through this channel extremely difficult.
    Date: 2011–08
  8. By: Yamada, Miwa
    Abstract: In order to prevent, suppress and punish human trafficking, bilateral agreements between origin of victim countries and destination countries are crucial, because their cooperation involves cross-border activities such as repatriation of victims, extradition of criminals and information-sharing. This article analyzes three bilateral legal instruments between The Government of The Kingdom of Thailand and her three neighboring countries, namely The Royal Government of Cambodia, The Government of Lao People's Democratic Republic and The Government of The Union of Myanmar. The analysis will examine the legal status of the victim, the victim as witness in criminal proceedings, the victim protection programs, the recovery and restitution of damages, the process of repatriating the victim, and the prosecution of the criminal.
    Keywords: Thailand, Cambodia, Laos, Myanmar, International agreements, International crime, Human rights, Children, Prostitution, Women, Human Trafficking, Memorandum of Understanding, Origin country, Destination country, Bilateral Cooperation
    Date: 2012–03

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