nep-iue New Economics Papers
on Informal and Underground Economics
Issue of 2013‒03‒02
five papers chosen by
Catalina Granda Carvajal
Universidad de Antioquia

  1. The Origins of Social Contracts: Attitudes toward Taxation in Urban Nigeria. By Cristina Bodea; Adrienne LeBas
  2. Using administrative data to evaluate municipal reforms : an evaluation of the impact of Minas Facil Expresso By Bruhn, Miriam; McKenzie, David
  3. Minimum Wages and the Creation of Illegal Migration By Gil S. Epstein; Odelia Heizler (Cohen)
  4. Georgia: Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism By International Monetary Fund
  5. Georgia: Report on Observance of Standards and Codes-FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism By International Monetary Fund

  1. By: Cristina Bodea; Adrienne LeBas
    Abstract: How do social contracts come into being? This paper argues that norm adoption plays an important and neglected role in this process. Using novel data from urban Nigeria, we examine why individuals adopt norms favoring a citizen obligation to pay tax where state enforcement is weak. We find that public goods delivery by the state produces the willingness to pay tax, but community characteristics also have a strong and independent effect on both social contract norms and actual tax payment. Individuals are less likely to adopt pro-tax norms if they have access to community provision of security and other services. In conflict-prone communities, where “self-help” provision of club goods is less effective, individuals are more likely to adopt social contract norms. Finally, we show that social contract norms substantially boost tax payment. This paper has broad implications for literatures on state formation, taxation, clientelism, and public goods provision.
    Date: 2013
  2. By: Bruhn, Miriam; McKenzie, David
    Abstract: Efforts to make it easier for firms to register formally are the most common form of business regulatory reform over the past decade. While there is evidence that large reforms have resulted in some increases in registration rates, recent experimental evidence suggests very few informal firms choose to register when given information about how to do so. This raises the question of whether it is productive for governments to continue to extend simplification efforts to all firms, especially those in more remote areas where many of the benefits of registering may be reduced. This study uses administrative data to evaluate the impact of Minas Facil Expresso, a program in the state of Minas Gerais, Brazil, which attempted to expand a business start-up simplification program to more remote municipalities. Using difference-in-differences with 56 months of registration data for 822 municipalities, the analysis finds introducing these units actually led to a reduction in registration rates, and no change in tax revenues. The paper uses this evaluation to illustrate the design choices and issues involved in using administrative data to evaluate reforms, with the goal of also providing a template that can be used for evaluating similar reforms elsewhere.
    Keywords: Corporate Law,Urban Governance and Management,Regional Governance,Municipal Financial Management,Municipal Management and Reform
    Date: 2013–02–01
  3. By: Gil S. Epstein (Bar-Ilan University); Odelia Heizler (Cohen)
    Abstract: In this paper, we explore employers’ decisions regarding the employment of legal and illegal immigrants in the presence of endogenous adjustment cost, minimum wages and an enforcement budget. We show that increasing the employment of legal foreign workers will increase the number of illegal immigrants which will replace the employment of the local population and thus creating illegal migration.
    Keywords: illegal immigration, foreign worker, minimum wages
    JEL: J3 K42
    Date: 2013–02
  4. By: International Monetary Fund
    Keywords: Anti-money laundering;Combating the financing of terrorism;Financial sector;Financial institutions;Banks;Insurance;Private sector;Legislation;International cooperation;Georgia;
    Date: 2013–01–08
  5. By: International Monetary Fund
    Keywords: Reports on the Observance of Standards and Codes;Anti-money laundering;Combating the financing of terrorism;Legislation;Financial institutions;Private sector;International cooperation;Georgia;
    Date: 2013–01–08

This nep-iue issue is ©2013 by Catalina Granda Carvajal. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.