nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2012‒10‒13
ten papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The Tax Gap: A Methodological Review By Gemmell, Norman; Hasseldine, John
  2. REGIONAL COMPETITION ON TAX ADMINISTRATION By Luca Salvadori; José María Durán-Cabré; Alejandro Esteller-Moré
  3. Income Taxation and Business Incorporation: Evidence from the Early Twentieth Century By Li Liu
  4. With Which Countries Do Tax Havens Share Information? By Katarzyna Anna Bilicka; Clemens Fuest
  5. A Journey from a Corruption Port to a Tax Haven By Shafik Hebous; Vilen Lipatov
  6. The Determinants of Compliance on Environmental Tax: The Insights of Theoretical and Experimental Approaches Motivated by the Case of Indonesia By Iskandar, Deden Dinar; Wuenscher, Tobias; Badhuri, Anik
  7. Endogenous skill formation, foreign capital and education subsidy in a dual economy By Chaudhuri, Sarbajit; Bandopadhyay, Titas Kumar
  8. Human Trafficking, a Shadow of Migration: Evidence from Germany By Seo-Young Cho
  9. El mercado laboral y el problema pensional colombiano By Hugo LóPEz Castaño; Francisco Lasso Valderrama
  10. Heterogeneidad estructural en el capitalismo: una mirada desde el marxismo de hoy By Samuel Jaramillo González

  1. By: Gemmell, Norman; Hasseldine, John
    Abstract: The global economic crisis has highlighted the continuing problem of tax evasion. For tax agencies to respond, an important antecedent necessitates knowing the extent of the problem. This study is the first to comprehensively review recent research on the tax gap. Our primary contributions are two-fold. First we argue that the tax gap, as conventionally defined, is conceptually flawed because it fails to capture behavioral responses by taxpayers adequately. Our second contribution is to review methods for measuring the tax gap and compare empirical estimates. We suggest that many of the most trenchant criticisms of conventional tax gap measurement (and the ‘hidden economy’ measures that underlie them) leave only microdatabased measures of tax non-compliance as likely to deliver more reliable tax gap estimates. Even here, however, further work is required, on both conceptual and empirical aspects, before tax gaps suitable for policy analysis (e.g. implications for enforcement policy) are likely to be delivered.
    Keywords: tax evasion, tax gap, behavioral responses,
    Date: 2012–09–24
  2. By: Luca Salvadori; José María Durán-Cabré; Alejandro Esteller-Moré
    Abstract: The tax auditing parameters have scarcely been analyzed by the literature as relevant policy-making instruments; however the enforcement strategies are crucial elements of the tax burden. In this paper we show that in a federal framework the tax auditing policies could represent additional tools on which regional institutions can interact between them. We investigate the presence of this interaction by means of a spatial econometric approach. We employ a time-space recursive model that accounts for sluggish adjustment in the auditing policies obtaining results congruent with standard theory and corroborating the presence of horizontal competition between regions on tax auditing policies. Moreover we find that once regional governments have legal power, the opaque competition on enforcement policies disappears and supposedly it switches to a more transparent competition on statutory tax parameters. Keywords: tax administration and auditing, fiscal competition, fiscal federalism JEL Classification: H71, H77, H83
    Date: 2012–10
  3. By: Li Liu (Centre for Business Taxation, University of Oxford)
    Abstract: If the corporate income tax is set at a different rate from non-corporate income tax, it can play an important role in a firm's choice of organizational form. The impact and interdependency of income tax incentives are crucial factors to take into account when designing efficient tax policies. In this paper I exploit the substantial variation in income taxes across U.S. states in the early twentieth century to estimate these sensitivities. The potential endogeneity of state taxes is addressed using an IV approach. The results demonstrate that the relative taxation of corporate to personal income has a significant impact on the corporate share of economic activities. Raising the entrepreneur's tax cost of incorporation by 10% decreases the mean corporate share of economic activities by about 11-18%. In addition, higher personal tax rates may affect the share of corporate activities through tax evasion and tax progressivity.
    Keywords: Corporate income tax; Personal income tax; Incorporation; Early Twentieth Century
    JEL: H25 H32 H71
    Date: 2012
  4. By: Katarzyna Anna Bilicka (Centre for Business Taxation, University of Oxford); Clemens Fuest (Centre for Business Taxation, University of Oxford)
    Abstract: In recent years tax havens and o¤shore ?nancial centres have come under increasing political pressure to cooperate with other countries in matters of taxation and e¤orts to crowd back tax evasion and avoidance. As a result many tax havens have signed tax information exchange agreements (TIEAs). In order to comply with OECD standards tax havens are obliged to sign at least 12 TIEAs with other countries. This paper investigates how tax havens have chosen their partner countries. We ask whether they have signed TIEAs with countries to which they have strong economic links or whether they have systematically avoided doing this, so that information exchange remains ine¤ective. We analyse 555 TIEAs signed by tax havens in the years 2008-2011 and ?nd that on average tax havens have signed more TIEAs with countries to which they have stronger economic links. Our analysis thus suggests that tax havens do not systematically undermine tax information exchange by signing TIEAs with irrelevant countries. However, this does not mean that they exchange information with all important partner countries.
    Keywords: tax havens, tax information exchange agreements, tax evasion
    JEL: H26 H77 H87
    Date: 2012
  5. By: Shafik Hebous (Goethe University Frankfurt); Vilen Lipatov (Goethe University Frankfurt)
    Abstract: We sketch a model according to which tax havens attract corporate income generated in corrupted countries. We consider the choice of optimal bribes by corrupt o¢ cials and the share of the proceeds of corruption that will be concealed in tax havens. In our framework, tax havens have two opposite e¤ects on welfare. First, tax havens?services have a positive e¤ect on welfare through encouraging investment by ?rms fearing expropriation and bribes in corrupt countries. Second, by supporting corruption and the concealment of o¢ cials?bribes, tax havens discourage the provision of public goods and hence have also a negative e¤ect on welfare. The net welfare e¤ect depends on the speci?ed preferences and parameters. One source of this ambiguity is that the presence of multinational ?rms in corrupted countries is positively associated with demanding tax havens?operations. Using fi?rm-level data, we provide empirical support for this hypothesis.
    Keywords: Tax Havens, Tax Avoidance, Tax Evasion, Multinational Firms, Corruption
    JEL: F23 H25 H32
    Date: 2012
  6. By: Iskandar, Deden Dinar; Wuenscher, Tobias; Badhuri, Anik
    Abstract: This study is intended to provide the clue regarding the determinants of compliance with environmental tax under imperfect monitoring and the presence of bribery, motivated by the case of Indonesia. The study is expected to contribute on environmental policy and tax compliance literatures, particularly by examining the impact of financial reward under the presence of bribery, aside of others conventional compliance instruments such as tax rate, audit, and sanction. In addition to financial reward, this study also incorporates the bribe explicitly as a determinant of compliance. The study employs theoretical and experimental approaches. While theoretical analysis find that the compliance will decrease with tax rate and increase with audit, sanction, financial reward, and the bribe rate; the experiment findings indicate that the impact of each determinant are vary according to the existence of bribery. Despite the difference, both approaches show that the bribery indeed hampers the compliance on environmental tax. The bribery encourages the polluting firms to aggressively evade the environmental tax as the tax rate increase and curbs the positive impact of financial reward in enhancing the compliance.
    Keywords: Environmental Tax, Compliance, Theoretical Approach, Laboratory Experiment, Environmental Economics and Policy,
    Date: 2012–04
  7. By: Chaudhuri, Sarbajit; Bandopadhyay, Titas Kumar
    Abstract: The present paper develops a three sector Harris-Todaro (1970) type general equilibrium model of unemployment by incorporating endogenous skill formation. Two types of labour are considered: skilled labour and un-skilled labour. We examine the effects of the inflows of foreign capital on the level of unskilled unemployment and skilled-unskilled wage inequality. We find that an inflow of foreign capital raises the skilled- unskilled wage gap and lowers the level of unemployment of the unskilled labour.
    Keywords: skill formation; foreign capital; education subsidy; wage inequality; unemployment
    JEL: F13 J41 O15 J64
    Date: 2012–09–29
  8. By: Seo-Young Cho
    Abstract: This paper empirically analyzes the relationship between migration and human trafficking inflows into Germany during the period between 2001 and 2010. My results suggest that migrant networks, measured by migrant stocks from a specific source country, have a causal linkage with the illicit, exploitative form of migration - human trafficking - from that respective country. However, the network effect varies across different income levels of source countries. The significant, positive effect of migrant networks on human trafficking decreases as the income level increases, and furthermore the effect is insignificant for high income countries.
    Keywords: Human trafficking, migration, network effects
    JEL: F22 J23 J61
    Date: 2012
  9. By: Hugo LóPEz Castaño; Francisco Lasso Valderrama
    Abstract: Este artículo examina el problema que plantea la cobertura pensional de los colombianos menos educados y más vulnerables. Relaciona las tendencias del mercado laboral con la baja cobertura pensional: el sesgo del empleo urbano moderno contra los menos educados ha generado para estos un ciclo de vida laboral muy marcado (empleo asalariado para los jóvenes, informal para los adultos): durante su fase asalariada temprana perciben ingresos relativamente mejores y, salvo en los períodos de desempleo, cotizan más al sistema pensional; durante su fase madura como informales perciben ingresos más bajos y dejan de cotizar. Ello, junto con la bajísima calidad del empleo rural, explica la baja cobertura pensional. Hemos diseñado un modelo para estimar el futuro laboral y pensional de cada uno de los 167.304 individuos en edad de trabajar existentes en la muestra de la encuesta nacional de hogares del DANE del tercer trimestre de 2007. Para ello ha sido necesario calcular su supervivencia hasta los 65 años, las probabilidades anuales de transición entre asalariados, no asalariados, desempleados e inactivos, por edades simples, sexo y nivel educativo y también, con base en la información de esa encuesta de hogares, las semanas y sumas monetarias cotizadas por cada uno. Dados los resultados (solo los más educados podrán pensionarse en proporciones significativas, los menos educados no) y con el fin de elevar la cobertura para estos últimos, hemos considerado una serie de modificaciones al mercado laboral colombiano y examinado también los impactos de la pensión familiar. Los resultados, que son bastante decepcionantes (la cobertura no sube mucho ni bajo el régimen de capitalización, ni bajo el de prima media a menos que este último se deficite peligrosamente), revelan que, aunque la densidad de cotizaciones se eleva significativamente y los salarios de los obreros y empleados suben cuando se formaliza en el empleo asalariado, resultan insuficientes dados los bajísimos ingresos de los trabajadores informales; sin embargo, bajo el régimen de capitalización y excluyendo la garantía de pensión mínima, el escenario más optimista (que incluye un alza del 50% en la educación superior) mejora sustancialmente la cobertura pensional global; lo hace al garantizar a la población empleos de altos salarios y con mayores densidades de cotización. Por eso, el artículo se ocupa también finalmente de los impactos de los beneficios económicos periódicos sobre las posibilidades pensionales de la población menos educada.
    Keywords: Modelos de ciclo de vida; seguridad social y pensiones públicas; economía laboral; tendencias demográficas. Classification JEL: D91, H55, H75, J0, J1, J2 J3
    Date: 2012–10
  10. By: Samuel Jaramillo González
    Abstract: En este texto se aborda el análisis del fenómeno de la heterogeneidad de las economías capitalistas, con la presencia de sectores denominados en diversas tradiciones teóricas como “informalidad", “marginalidad”, “economía popular”, etcétera, a partir de categorías marxistas, y desde la óptica de la corriente de la Teoría del Valor Trabajo Abstracto. El nodo del análisis parte del uso de dos nociones: la coexistencia de diferentes “formas de producción” en las economías dominadas por el Modo de Producción Capitalista y la asimilación, en términos analíticos, de estas formas alternas no capitalistas a la categoría marxista de Economía Mercantil Simple. Se analiza el papel de la producción mercantil simple en el funcionamiento básico de la economía capitalista, en especial en la operación del proceso de proletarización y en la fijación del salario, se analizan las condiciones requeridas para la coexistencia de productores capitalistas y mercantiles simples en un mismo mercado, y se hacen algunas exploraciones sobre la articulación del fenómeno del desempleo en una economía que incluya las dos formas de producción mencionadas.
    Date: 2012–08–09

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